Oceania Healthcare retirement apartments hit an average sale price of $1m

Thursday, 25 July 2019

Nine new apartments at The Sands aged care and retirement village in Browns Bay, Auckland, owned by Oceania Healthcare, have sold for an average $1.7m.

The average sale price of Oceania Healthcare's retirement apartments has hit an eye-watering $1 million.

That was revealed when the company released its annual result for the year till the end of May 2019 and posted a $45.4m profit after tax.

The aged care provider is in the midst of a multi-million dollar modernisation and construction programme decommissioning older units and rooms and redeveloping and expanding its aged care and retirement villages throughout New Zealand.

Oceania said its $1m average apartment sale price for New Zealand resulted from higher prices for new apartments in Auckland at The Sands and the Meadowbank aged care and retirement complexes located in high-value suburbs.

Oceania Healthcare chief executive Earl Gasparich says the average sale price of $1m for Oceania apartments was pushed up by higher prices in premium Auckland suburbs of Browns Bay and Meadowbank.

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The Sands is on the waterfront in the pricey Auckland suburb of Browns Bay and Meadowbank similarly is a leafy suburb neighbouring upmarket Remuera.

At the recently completed The Sands nine apartments had fetched an average $1.7m each.

The average $998,000 apartment price is 2.5 per cent up on the average $973,000 the year before and 29 per cent higher than the $775,000 in 2017.

As for independent-living retirement units, their average was $514,000, 27 per cent higher than the previous year's $403,000 average. Oceania said the higher average reflected sales at the Elmwood village in Manurewa, Auckland.

Oceania chief executive Earl Gasparich said the high apartment prices in Browns Bay and Meadowbank was due to their high-value Auckland locations.

'So I wouldn't get carried away with thinking that we're going to continue selling at an average of $1 million for the next five years.'

'Once we get out of Auckland then the average sale price is considerably lower.'

The company's development margin was higher in Auckland too as a result of higher land values and house prices.

The development margin is the sale price less the cost of the land and the cost of building.

In Auckland Oceania's development margin was about 30 per cent, but more like 10 per cent to 15 per cent in other parts of New Zealand.

Generally, retirement units would sell for about 80 per cent of surrounding local house prices, Gasparich said.

But in Auckland it was less than 80 per cent because house prices were so much higher. For instance in Meadowbank house prices were well into the $2m range while the average retirement unit would be almost half that.

Oceania was redeveloping many of its retirement facilities. The Sands was originally a single-storey aged care facility and had been rebuilt to a five-level integrated aged care and independent units complex.

Oceania was formed about 15 years ago and provides care to about 4000 residents in 48 facilities.

It completed building 159 new care suites at The Bayview, Meadowbank and The Sands facilities in the 2019 financial year and completed 113 apartments at The Sands and Meadowbank.

It expects to complete another 265 care suites and apartments in the year to May 2020.

The $45.4m profit was $31.6m below the previous year, primarily due to existing village valuations remaining stable, the company said.