SUM - Summerset Group

[tuaman]

Do you guys ever think of over-supply of retirement villages?
I noticed that these construction sites popping up everywhere and they are huge. I can see lots of new village marketing advert in local newspapers and some even have special front cover page ad. Is demand good enough? Please share your thoughts.

[ratkin]

Do you guys ever think of over-supply of retirement villages?
I noticed that these construction sites popping up everywhere and they are huge. I can see lots of new village marketing advert in local newspapers and some even have special front cover page ad. Is demand good enough? Please share your thoughts.

5719F912-CC80-479F-8D2D-8BD2E920E6B8.jpg

The increase in the older old (over80s) is even more pronounced due to increasing life expectancies. should be plenty of people around to fill the retirement homes for a while yet.

[Brain]

From superseniors.msd.govt.nz

THE NUMBERS:

65 plus
The number of people aged 65 and over is increasing

• At the end of 2016, 711,200 people were aged 65-plus
• Those aged 65 years and older will roughly double, from 711,200 in 2016 to between 1.3 and 1.5 million in 2046
• Or 23 per cent of the total population, up from 12 per cent in 2016.

so is the number aged over 80

• At the end of 2016, 169,000 people were aged 80+
• That number is projected to climb to 392,800 by 2036
• It's an increase of 132.4 per cent

and the 95-plus numbers are increasing

• At the end of 2016, 5,800 people were aged 95-plus
• By 2036, it's projected the number will rise to 14,500. It's an increase of 150 per cent
• By 2056, the number will climb to 42,400 aged 95-plus. That's a 631% increase from 2016.

[justakiwi]

You are right about increasing life expectancies and an increase in the number of people over 80. BUT my concern is that many (if not most) of those people over 80, and certainly those in their 90s, will not be able enough to live independently (in a village unit). As I said before, most of the residents at the rest home I work in, are between 80 and 102. None of them would be able to live in a village unit. Remember too that none of our residents are hospital level care yet so not classed as "high need" but still do need a significant level of care/assistance.

If villages continue to be focused on independent living units/cottages, rather than rest home, hospital level and dementia care, I think oversupply down the track, is a good possibility.

This is just my humble opinion based on what I see in my job, conversations I have with the elderly, and a general understanding of aging related issues.

I guess it all depends on what you mean by "for a while yet."

5719F912-CC80-479F-8D2D-8BD2E920E6B8.jpg

The increase in the older old (over80s) is even more pronounced due to increasing life expectancies. should be plenty of people around to fill the retirement homes for a while yet.

[Maverick]

That's an excellent question Tuaman. I see some good numbers already offered to you so here are a few more.
NZ "penetration"(the % of oldies choosing to move into a village) is about 13%, other comparable countries are 2% higher. I read a year ago that the limitation to our penetration rate is that there just aren't enough units currently available.
It has been well stated from the players that 1800 or so need to be built extra each year to match the ageing bubble.
At the OCA meeting the other week, Greg T made a comment that their own rollout rate (pipeline) is matched and can be altered to suit the demand.
Im certain all of these guys spend a lot of time modeling supply and demand before they phone up the diggers.

[percy]

I guess in a growing market, we should expect a growing amount of villages aggressively marketing their products.
That certainly appears to be happening here in Christchurch.

[BlackPeter]

You are right about increasing life expectancies and an increase in the number of people over 80. BUT my concern is that many (if not most) of those people over 80, and certainly those in their 90s, will not be able enough to live independently (in a village unit). As I said before, most of the residents at the rest home I work in, are between 80 and 102. None of them would be able to live in a village unit. Remember too that none of our residents are hospital level care yet so not classed as "high need" but still do need a significant level of care/assistance.

If villages continue to be focused on independent living units/cottages, rather than rest home, hospital level and dementia care, I think oversupply down the track, is a good possibility.

This is just my humble opinion based on what I see in my job, conversations I have with the elderly, and a general understanding of aging related issues.

I guess it all depends on what you mean by "for a while yet."

Good points supported by personal experiences - and very worthwhile discussing.

One risk with personal experiences though is that one tends to extrapolate what one sees to the areas one doesn't see - assuming all things being equal. However - maybe the population of 80 to 102 years old you are seeing is not representative for the total cohort, but specially picked due to their inability to live independently. Why else would people want to live together with other people who can't care anymore for themselves?

I think your experience is genuine, but it might not be representative ...

There are a number of aging trends:

1) Across the whole population a huge increase of the people above 80, 85, 90 (pick your number) - plenty of graphs in this thread to demonstrate that;

2) A tendency for the better educated and generally better off people in this cohort to stay for longer active and healthy (i.e. being able to live independently)

3) A tendency for the less educated (and often less well off) to need care earlier due to health problems often caused by drug and alcohol-abuse, obesity and generally less healthy lifestyle ...

I suspect what you are seeing at work is in the majority members of the latter group while the target group for independent retirement living is clearly group 2.

I am not too concerned that clients for Summerset and similar retirement villages will run out anytime soon - or to be more specific over the next 30 years or so.

Clearly around 2050 retirement villages will need to review their growth profile ...

[winner69]

BlackPeter

Clearly around 2050 retirement villages will need to review their growth profile

Supply will be over time be adjusted by the number of units that have rotten away / fallen over and not replaced

[BlackPeter]

Supply will be over time be adjusted by the number of units that have rotten away / fallen over and not replaced

This might be more relevant, though for the MET thread

[Beagle]

I'm with Maverick on this one and expect the penetration rate to increase to about 15% over time, possibly even more.
Baby boomers coming through have plenty of money. OCR at 0.25% - 0.5% by mid next year will be stimulatory to the housing market.
Coutts and his wife tell me that SUM have been making some very good high level hires in the care side of their business lately. I think they are looking to significantly improve that side of their business. The good time's are coming back, no worries.