The rapid expansion of Victoria's urban population in tandem with the ageing of that population will have major implications for the future development of the aged care sector.

Melbourne currently has a population of 4.25 million, and in 2012 saw the highest population growth out of all Australian cities.

In addition to this growth, Victoria’s population is also rapidly ageing. In 2009 13.6 per cent of the population was aged over 65 years. In 2056 this figure is expected to nearly double to in excess of 26 per cent.

Planning policy is largely directing a population increase, of both young and old people alike, at the urban fringes where low density development will occur, and in urban renewal areas situated within the existing metropolitan area, where higher density development is the norm.

Within this demographic and policy context we are also seeing a massive influx of foreign investment – from China and southeast Asia in particular.

So what does this mean in the context of the aged care sector?

More facilities, in light of the ongoing increase in people requiring care, is a given. These facilities will also be more centrally located – closer to the city, closer to existing amenities, and closer to other concentrated populations and the families of residents.

It will also mean, however, that bigger facilities that will likely require larger sites and taller buildings, as these large sites themselves become more scarce. Increasing foreign investment and local development pressure is going to make it even for difficult for clients in the aged care sector to acquire these sites.

There is already a real shift toward vertical aged care facilities – that is, facilities provided in buildings more akin to medium and higher density apartment buildings. This type of development is only going to become more prevalent in the future.

If a number of new aged care facilities are going to be required, however, and if they’re likely to be in larger buildings, perhaps more similar to high-rise towers, where are they going to be situated?

The outcome will in part be determined by the Victorian Planning system, given that wherever you build you need a planning permit to do so.

Over the past year, there have been a number of key changes which will influence the ability of a client to obtain a permit for higher density development throughout Melbourne: the introduction of Plan Melbourne and a suite of new planning zones.

At a regional planning policy level, we have a new planning strategy – Plan Melbourne – which replaces Melbourne 2030 and is being incorporated into the Victorian Planning Provisions.

The idea is that by focusing population growth near employment clusters you allow people to live closer to where they work. This not only improves liveability but it also has the key benefit of substantially reducing pressure on our transport system.

We also have key urban renewal areas identified by a new Metro Planning Strategy. The majority of these are concentrated around the existing inner city area, where they can take advantage of existing amenities and transportation infrastructure.

For example, substantial development is expected in Sunshine and Footscray in the western corridors, and in Fishersmans Bend, E-Gate and Arden Macaulay nearer to the CBD.

These may not necessarily be traditional focal areas for aged care developers but they are increasingly the regions where new higher density development will be concentrated.