Cafés and restaurants, movie theatre, gym and a pool.
These might sound like the facilities of a fine hotel, but they can also be found in a small but growing number of aged care homes.
Developers are targeting a new type of retirement and aged care home aimed at wealthy baby boomers reluctant to let go of their inner-suburban café culture lifestyles.
This vision of retirement includes many of the lifestyle amenities to which they have become accustomed in their working lives.
And, sitting on a large nest egg in the form of a large family home in Melbourne or Sydney’s middle suburbs, this age cohort has the capital to choose a retirement home that will be very different from the nursing homes of their parents.
Baby boomers have changed the expectations of each life stage that they pass through, and the retirement phase is next on the list.
But the aged care industry is only just starting to prepare for it. A handful of developers are targeting high-rise, inner-city living for retirees, with all the mod cons, and have been met with robust demand.
As the Intergenerational Report reminds us, our population is growing older and services will be struggling to keep pace with burgeoning needs.
“In general, there is more interest towards the middle ring and inner-city developments than in the past,” says Derek McMillan, the chief executive of retirement living at Australian Unity.
Australian Unity owns and operates Rathdowne Place in Carlton, 2.5 kilometres from Melbourne’s CBD, built with Australand and Citigroup. The 162-bed aged care facility was completed last year at a cost of $67 million and is a short walk from cafes and restaurants and a tram ride from town. Units cost from $345,000 to $1.3m, which isn’t out of line with apartment costs in Carlton.
Construction begins in May on two adjacent towers, which will house 180 independent living apartments. Australian Unity may tap third party equity from private or institutional investors.
McMillan says the strategy has been to build the facility into the community, so that its café, gym, and allied health offices are also open to the public. “What we proposed was more of a community that encourages people from the neighbourhood to come in and engage with residents.”
Australian Unity, an unlisted mutual company, is one of a handful of developers addressing the market. Apartment style retirement living is more prevalent in Sydney, where Stockland’s Cardinal Freeman village in Ashfield is less than 10kms from the city; Victorian-based TLC Aged Care is building a high-rise facility in inner-suburban Clifton Hill with a rooftop pool and barbeque.
Caption: The lobby at Rathdowne Place
The aged-care sector in Australia is highly fragmented, with 63 per cent of facilities owned by single operators and scattered across middle and outer suburbs and regional areas. As the sector consolidates, larger developers with stronger balance sheets and better access to funding can afford higher-priced land close to the cities.
Older-style villa units, built in the outer suburbs, are often small and without parking spaces; while the aged care homes can have three or four beds to a room and shared bathrooms.
“The immediate challenge (for the industry) is to address the obsolete stock,” says McMillan, who estimates that up to a quarter of all aged care beds in Australia are out of date. He believes that these homes would close down and be replaced by more modern rivals if the industry were open to greater competition.
The problem is that construction is only just keeping place with current demand, rather than looking to the very near future when demand will skyrocket. The youngest boomers turn 50 this year, and the oldest are 69.
Australia has about 182,000 aged care beds at present, and will need 82,000 new beds by 2020. Aged and Community Services Australia estimates two new 100-bed facilities would need to open every week in coming years to meet demand -- and that patently isn’t happening.
Supply is controlled. Last year, the federal government issued 10,000 new aged care bed licences, and developers bid for them. Those beds will take two to three years to become available.
As government struggles with rising health costs that will drag on the budget in the decades ahead, the funding mix of aged pension and self-funding for aged care should be up for debate so that those on lower incomes remain supported. The government currently provides 71 per cent of funding.
Only 11 per cent of Australians plan to sell the family home to fund retirement, according to MLC, and $568 billion is currently held in assets by SMSFs. Some shift in the funding mix may be needed.