The retirement sector is changing dramatically as 70 becomes the new 60, and cashed-up superannuitants look for maintenance-free, facility-rich, lock-up-and-leave living
The days of being dragged over to Grandma’s rest home, and having to perch quietly on an uncomfortable chair while being fed four-week old shortbread biscuits are over. Old people just aren’t that old any more. In a host of new retirement villages popping up around the country, grandchildren are more likely to be seen jumping into the in-house swimming pool with their spritely retired relatives, having downed a fluffy at the fancy on-site cafe.
At Greenwich Gardens in Unsworth Heights, on Auckland’s North Shore, construction that started in 2014 is still in full-on mode. The complex, which includes villas, apartments, assisted living units and care facilities, won’t be finished until 2020, but it already has 133 residents, plus 16 in care. The reception area is huge, made to look even more spacious by a light-filled atrium. There’s a cafe – open to the public – adding to the impression of a land-bound cruise ship. Pool, spa, bowling green … and while the traditional rest home style van still exists, there are also three communal cars available to borrow.
Metlifecare CEO Glen Sowry says a village-owned car-sharing service means residents maintain independence while avoiding the hassle of owning a car. But it also means expensive Auckland real estate is not tied up in parking spaces. “It’s still a trial at the moment. Something like 10 – 15 percent of residents are using them. They’re out four – five times a week for local trips, doctors and hairdressers, shopping,” he says. Not that they have to go to the hairdresser outside the village walls; there’s one on the premises.
It’s that type of thinking that is changing the face of communal living for older people. Metlifecare operates 24 villages, mostly in Auckland, Northland and the Bay of Plenty. Its motto “more to come” is a reference to all the living still to be lived after work finishes, but it could equally be about the construction programme being carried out. At the moment, new villages and care facilities are going up at Papamoa Beach and Mt Maunganui (Somervale), Kapiti Coast, Kerikeri and Auckland. New development plans are in place in Botany and Orewa. It added 235 beds in the last financial year, and is aiming for about the same number in the current year. The target is to add 300 beds a year by 2020, which Sowry says is “quite realistic”.
Is there a danger of over-expansion? “That’s something we are conscious of. These villages are very expensive to build …. we can’t stop half way through. We are committed.” Sowry says he’s not taking the growth for granted and decisions to acquire land to build on are based on thoroughly investigated criteria. Nor is every new development going to be a Greenwich style mega-village. Metlifecare was knocked back on its original plans at Red Beach on the Hibiscus Coast which Sowry says he realises now were completely wrong for the area.
The company this week reported a record profit of $251.5 million, up 10 percent on last year. The figure was boosted by soaring property prices – a 14 percent gain on the value of its assets. But resales were also significant, and that aspect of the business has attracted significant criticism in the last couple of years. Residents, when they leave a facility, are not able to realise the capital gains from their homes as they would have in their own properties – and their sons and daughters in some cases have made their anger over that clear.
Sowry points out that buying into a retirement village is not an investment in capital – if you wanted to preserve your capital in property, you would continue to live in it. And people have that choice. What they are investing in, he says, is a lifestyle. They are cashing in their homes that have hugely increased in value, and using it to fund travel, maybe a new car. “It is something that at Metlifecare we are mindful of … but what we are offering and can provide, you’re not going to get if you continue living in the family home.” Sowry says it’s an “age and stage” thing – often the decision to move to a village is with one eye on the future if health problems are looming. In some cases their children, he says, are looking at their inheritance being diminished. “But most people (buying in) have worked hard, are in their sunset years, and want to live life well.”
At 98 percent occupancy for Metlifecare beds, it is not an issue Sowry intends to move on any time soon.
The property market is flattening out, however, and those fierce capital gains on its holdings can’t last forever. Sowry says as long as demand remains strong and liquidity firm, the returns will keep coming. “If the market comes under extreme pressure and people can’t sell their houses that would change the situation.” Where the business will hold up though, is in demographics.
“We commissioned pretty comprehensive market research last year to understand the views of existing residents, prospective residents, and baby boomers who will be our customers of the future. Their thoughts, prejudices, aspirations and expectations for future living,” he says. Those focus groups have given the company a sense of direction of travel for the next 30 plus years. At the moment 12 percent of people aged over 75 live in a retirement village (“Don’t call them rest homes”). “If we can increase the attractiveness of the properties there is tremendous opportunity to grow,” he says.
“If you look at the baby boomer bulge that’s coming – if you reclaimed 12 percent of that cohort then there’s a lot of growth there just on its own. But if you can grow percentage rates there is more growth yet.” Sowry says what came through strongly in their research was that people think they’re much younger than they really are. “If you think about it, you always think of yourself as being younger than you are – as you get older that becomes more pronounced,” he says. Metlifecare’s change in imagery came after one man aged about 80 saw his picture in an ad agency photo shoot and started crying – saying, “I don’t recognise that old bugger”.
“It was quite a profound insight,” says Sowry. “Healthcare and technology is increasing our quality of life. We think of ourselves as more vital and active and full of life than the last generation.”
Sowry says Metlifecare is not unique in recognising this change, with all its major competitors going the same way. We are living longer, there is increasing demand, and the Government isn’t building care facilities – so the private sector is stepping up.
Would he live in one of his own villages? “If you had asked me that two years ago I probably would have said no, but looking at the product we are offering now, absolutely. We are loving it. A lot of people think of them as big rest homes, but what opened my eyes was exactly what’s happening at Greenwich Gardens.” That includes menus designed by top chef Simon Gault (the company’s research uncovered good food as being one of the top priorities of retired people), carefully thought-out colour schemes (the carpet is not uniform so those who may get a little lost in the complex have markers to go by). The care units are split into pods so people aren’t gathering to eat with “100 of their closest friends”. Families are encouraged to visit, and cook a meal if they wish to.
“We want to make sure they stand the test of time,” says Sowry.