Expect a Boom in Aged Care Developments

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Tuesday, July 28th, 2015
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A new report indicates that the Healthcare and Retirement Living (HRL) sector is on the verge of major growth drive, with dramatic changes to Australia’s demographic structure over upcoming decades creating a surge in demand.

Colliers International’s 2015 Healthcare and Retirement Living report points out that the investment fundamentals for the HRL sector are fast improving as Australia’s aged population expands and seeks more affordable housing solutions.

Australia’s population is expected to see robust gains over the next several decades, with aged Australians accounting for a highly disproportionate share of this growth.

According to Colliers, while Australia’s population is expected to increase by 65 per cent during the 40 years from 2015 to 2055, rising from 23.9 million at present to 39.4 million, the number of Australians aged 65 years and greater will more than double during the same period, increasing from 3.6 million to 8.5 million.

The proportion of workers to retirees will inevitably dwindle as the elderly comprise an increasingly sizeable percentage of the total population, placing a greater economic burden on those Australians still in the workforce and spurring demand for more affordable retirement options.

The HRL sector, which encompasses aged care, retirement homes, manufactured homes medical centres and hospitals, will receive a significant boost from the demand created by this disproportionate expansion of Australia’s aging population.

Colliers expects growth in Australia’s elderly population to require the creation of 69,000 more aged care facilities in just the next seven years.

This surge in demand has already prompted a major shift in the HRL sector, from smaller independent operators to larger facilities run by public corporations that are capable of exploiting economies of scale.

In the past year alone, three companies in the sector – Japara, Regis and Estia – have listed on the Australian Stock Exchange and received strong market interest.

Manufactured Housing Estates (MHE), comprised of self-contained dwellings that are first pre-built off-site before being delivered to and assembled at their desired location, will also benefit from the swelling of Australia’s elderly population – particularly as ongoing quality improvements heighten their appeal as an affordable housing solution for retirees.

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