AUSTRALIA | As it's population ages, the Australian aged care sector is poised for significant growth following recent momentum.
The Australian Retirement Villages and Aged Care sector collectively account for approximately 430,000 places. This was uncovered by recent data accumulated to project how and when the next generation of Australians will retire, and what challenges may be encountered over the next two decades.
Recent market insights from CBRE Group have estimated that the senior housing sector is nearly four times larger than student accommodation and 10 times larger than the current build-to-rent sectors.
Although it’s population demographic has a commanding lead, the sector has low-levels of institutional ownership and we foresee significant opportunities for consolidation. For example, the market share for top five operators in retirement villages is ~13 percent and aged care ~17 percent.
Transaction activity in the sector is remained vibrant and thriving, with at least nine deals exceeding AUD $100 million in Villages and six AUD $100m deals in Aged Care since 2021. In a similar vein, retirement villages have continued to trade at some of the largest discounts to homes in close proximity, providing fruitful opportunities for incoming investors.
The over 65-year-old demographic of the Australian population is projected to grow from 4.75 million residents currently to 7.0 million by 2040. Around 11 percent of this cohort already reside in retirement villages and aged care facilities. The new supply of senior living stock has also continued to grow at a modest one percent to 1.7 percent per annum,with a lagging +2.4 percent per annum increase in the over 65 years population. Home care has also helped to alleviate the demand and supply mismatch.
Product quality and amenity expectations are also likely to continue to evolve as new retirees take advantage of larger accumulated asset balances.
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