New Zealand’s Retirement Village Sector Continues To Expand, But Future Supply Concerns Loom

• The current rate of development necessitates a significant increase in the number of retirement village units and aged care beds to meet future demand 

• This year, 2,298 units were completed, higher than the 5-year average growth in units of 1,913, and higher than the 10-year average of 1,696 units

• In addition to the current development pipeline, an additional 932 units need to be built each year, for the next 25 years, for the industry to meet its demand by 2048.

Auckland, 2 September 2024 – JLL New Zealand has today released its Retirement Villages Market Review 2024, providing an analysis of the country’s aged care and retirement living industry. The review highlights the sector's growth, ongoing trends, and future challenges, offering critical insights for industry stakeholders and policymakers.

The review, based on data from JLL’s New Zealand Retirement Village Database (NZRVD) and Aged Care Database (NZACD), reveals that as of December 2023, New Zealand has 470 retirement villages, encompassing 41,111 units and housing approximately 53,444 residents. This marks a significant increase from previous years, driven by continued demand from the country’s aging population.

JLL’s Head of Research, Gavin Read, says, "New Zealand’s retirement village sector has shown remarkable growth over the past decade, reflecting the increasing demand from our aging population. However, the findings of our review underscore the importance of strategic planning and development to ensure that future demand can be met."

"There is a clear requirement for operators to scale up their developments to avoid a potential supply shortfall in the coming years."

Tracey Martin, Chief Executive Officer (CEO) of the Aged Care Association (ACA), says it’s critical that there is incentive for retirement village operators to invest in aged care beds.

“There will be a shortage of aged care beds in the short-, medium- and long-terms, unless the model is redesigned. This is particularly true for non-Big 6 operators, as they have little incentives to invest in their aged care beds, whether it is an upgrade, an extension to existing facilities, or a new build.”

Key findings

• Sustained growth: New Zealand’s retirement village sector has seen consistent growth, with an average annual growth of 1,754 units since JLL’s first market review in 2012. In 2023 alone, 2,298 units were completed, surpassing both the 5-year and 10-year average growth rates

• Regional focus: Auckland remains the epicentre of retirement village development, with 12,613 units across 106 villages, making it the region with the highest concentration of villages and residents. The city’s villages are notably larger when compared to the rest of the country, averaging 119 units per village

• Big 6 dominance: The industry’s largest operators, collectively known as the "Big 6," continue to dominate the sector, accounting for 46% of all villages and 67% of total units. Their villages are significantly larger, averaging 127 units compared to 54 units for non-Big 6 villages

• Luxury trends: The trend of luxury retirement villages is on the rise with Oceania, Generus Living Group, and Northbrook, among others, developing villages with high-end amenities such as wellness centres, private clubs, and gourmet dining.

• Future supply challenges: Despite current growth, the review warns of a potential shortfall in retirement village units by 2033 and 2048. By 2048, the demand for retirement accommodation is expected to reach 112,624 people, necessitating a significant increase in the number of retirement village units and aged care beds to meet this demand. JLL anticipates a supply shortage of 8,367 units by 2033, and 23,302 units by 2048

• Aged care integration: The review also discusses the integration of aged care units into retirement villages, noting that while the Big 6 dominate retirement village units, they only account for 36% of aged care beds. This highlights the importance of smaller providers in the aged care sector and the ongoing challenges in meeting the care needs of New Zealand’s elderly population.

About JLL

For over 200 years, JLL (NYSE: JLL), a leading global commercial real estate and investment management company, has helped clients buy, build, occupy, manage and invest in a variety of commercial, industrial, hotel, residential and retail properties. A Fortune 500® company with annual revenue of $20.9 billion and operations in over 80 countries around the world, our more than 105,000 employees bring the power of a global platform combined with local expertise. Driven by our purpose to shape the future of real estate for a better world, we help our clients, people and communities SEE A BRIGHTER WAYSM. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated.

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