How Can Aussie Listed Property Funds Innovate in Aged Care and Retirement Living?

Retirement living is a key investment priority for many listed home funds right now.

Today, Stockland [ASX:SGP] closed an offer to purchase eight retirement communities from Masonic Homes for a wholesome $75.8 million.

Last week, Eureka Group Holdings [ASX:EGH] acquired its Eleventh retirement village.

In May, Estia Health [ASX:EHE] acquired four new nursing facilities across two states.

Several providers are also building new facilities. And they’re not your common old folks’ homes either. They’re modern, stylish buildings along with blends of independent residing and nursing home rooms, with regard to continuous care.

Analysts are positive about the future of the retirement as well as aged care living industry.

For example, Tom Duncan, associate director of research at Colliers Worldwide, reports that:

‘The Healthcare and Retirement Living (HRL) sector, which includes aged care [and] retirement living … is poised for growth. This is fuelled by strong investment fundamentals and Australia’s growing and ageing population who will seek more economic living choices. HRL is subject to significant marketplace interest [because of] a greater than ever need for a good offering in this key sector.’

According in order to Department of Health predictions, Australia will need an extra 7,667 aged care places per year up to 2022. That’s in addition to the thousands of independent living dwellings that will be built to meet demand from older Australians selectively downsizing.

But what does ‘economic’ mean? Surely it doesn’t simply mean cheaper to buy into, or cheaper to be a member of? And importantly, what does ‘solid offering‘ mean? Does that mean specialist care for different conditions, a variety of home styles, different price points, or anything else altogether?

One thing is clear. As the retirement and aged care market becomes more crowded, large listed funds will have to diversify to stay competitive. In Duncan’s statement for Colliers, he also mentioned which ‘The ideal balance of a profile [of retirement properties] will include … an appropriate mix of new and innovative product‘.

For inspiration on what’s ‘innovative‘ in retirement living, Aussie property companies look overseas.

De Hogeweyk

De Hogeweyk is a gated village that’s part of the Hogewey nursing home company in Weesp, in the Netherlands. It is owned by Vivium, a government company.

The reason this Dutch village is so unique is that it has been specially designed for residents along with dementia. It’s a self-contained community with its personal park, town square, grocery store, theatre, salon, eateries, and so on. There are 23 houses among the 152 residents.

Over 250 staff act as shopkeepers, waiters etc. whilst caring for the residents. They help to maintain the Truman Show-style ‘reality’ that the citizens live in. This is labour-intensive and expensive. So to help pay for all this, the public are allowed in to spend money in the shops and entertainment venues.

Left to right: the square, some of the shops, the supermarket, and the pub.
Source: Allianz, realestate.com.au
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Residents are reportedly happier, healthier, and require less medicine. Each resident pays about euro 5,000 per month for a place in the village. That’s around $7,216, or $236.Sixty per day. In Australia, the maximum basic daily fee that the government will pay for new residents is actually $47.49 per day. So the ‘dementia village’ in Australia would be a high treatment option, or a premium option that wealthier families of dementia victims could elect to pay for.

The expertise to design a village like this is readily available. Dementia Village Architects is a Dutch firm that’s worked on De Hogeweyk, as well as the future Mahal Cielo Village in San Luis Obispo, California.

Lasell Village

Several research indicates that lifelong learning has real health benefits. Seniors that continue to learn are often crisper, more engaged, and happier. A 2004 study in the Oxford Review of Education said that ‘Participation in lifelong learning had effects upon a range of health outcomes; well\being, protection and recovery through mental health difficulties, and the capacity to cope with potentially stress\inducing circumstances including the onset and progression of chronic illness and disability. These effects were mediated through relatively immediate impacts of learning upon psychosocial qualities; self\esteem, self\efficacy, a feeling of purpose and hope, competences, as well as social integration.’

In other words, it’s got emotional and mental benefits, as well as physical types.

At Lasell Village in Newton, Massachusetts, they’re serious about senior education. So much in fact that it’s compulsory. Residents in the village must complete a the least 450 hours of academic classes and fitness classes every year.

Source: Lasell Village
[Click to enlarge]

Courses are run in the Village, and residents will also be encouraged and helped to attend nearby colleges. For example, they can take undergraduate and move on programs at the nearby Lasell College. Some residents also teach or tutor. Residents can also take courses at other institutions. Harvard University is under 20 minutes away, so they’re in good academic organization.

High rise retirement in China

In The far east, it’s traditional for seniors to move in with their children whenever they can no longer maintain their own home and look after themselves. In many cases, they’ll start living with their children well before they even retire. It’s seen as the children’s duty to maintain their parents and grandma and grandpa. Elderly people are accorded the highest possible level of respect and treatment.

But Chinese society is changing. There are many worldly couples and lovers who don’t want m and b to relocate with them when they’re old. They have careers to chase, abroad holidays to take, and they’re accustomed to the idea of personal space. That doesn’t mean they don’t love and respect their mother and father, though. They want the best of amenities and care for their parents — they just want to outsource it. Which is why there’s burgeoning international interest in luxury retirement living within China.

Still, land prices are absurd in major cities like China and Shanghai. So it doesn’t really make sense for Chinese companies — or even foreign companies operating within China — to build spread-out Western design villages. The smart option would be to design high rise apartment buildings that also meet the mobility needs associated with older residents.

Enter the Xiangshu Bay project, currently being developed in Shanghai through American firm Merrill Gardens.

Xiangshu These types of will offer meals, housekeeping as well as medical supervision. But it will also have purpose built recreation spaces, manicured gardens, transport for shopping and appointments, along with a swimming pool. A restaurant, caf, fitness center, library, spa and hair salon will round out the luxury onsite offerings. Merrill Gardens is also attempting to cater to the locals with mah-jong rooms, arts studios, along with a tea house.

In addition to the actual nursing home area, and a safe area for residents with dementia, the work will also have 150 independent living units.

Source: merrillgardens.com.cn
[Click to enlarge]

They’ve also got another stunning tower planned for the northern city of Harbin.

Source: merrillgardens.com.cn
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Of course, places in these developments won’t come cheap. The company is planning to charge up to $3,375 a month for a place at the Shanghai improvement.

In some ways, it will be a proof-of-concept with regard to Chinese interest in luxury supported retirement living.

It could go head to head with the developments underway by Australia’s Aveo Team [ASX:AOG] in partnership with Tide Holdings The far east. They’re planning two developments, in forested areas outside Shanghai (left) and Beijing (right):

Source: Aveo China
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It seems developments like these could be a smart option for high-priced Foreign cities including Sydney as well as Melbourne.

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Eva Mellors,
Contributor, Money Morning