Fletcher Building expands into retirement village market with Vivid Living
Tuesday, 7 December 2021
Fletcher Building is expanding into the retirement village business, where growth is surging to cater for the country’s ageing population.
The construction and building supplies firm announced on Tuesday it is launching retirement living brand Vivid Living, where it will partner with Private Care NZ, a subsidiary of New Zealand Health Group and one of the country’s largest in-home healthcare providers.
Fletcher is developing its first villages within the Fletcher Living communities of Waiata Shores and Red Beach in Auckland, which will be available for people to view and buy from March next year.
Retirement villages are growing rapidly to cater for an ageing population, with the proportion of the population aged over 75 forecast to double over the next 25 years. A recent report by property company Jones Lang LaSalle said about 11,000 units were being built across the country, with a further 15,000 needed to meet forecast demand by 2033.
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Fletcher will be entering a market with big established players such as Ryman Healthcare, Summerset and Metlifecare, and newer players such as Oceania Healthcare and Arvida.
However in contrast to the existing big players, Fletcher is eyeing the 85 per cent of people aged over 75 who don’t currently live in a retirement village and developing an offering that resonates with them, said Fletcher Building head of retirement Matt Davies.
Vivid Living is targeted at residents aged 70 and older who want to live in an independent home supported by home healthcare, which can be tailored to their needs and would be paid for separately.
“It’s definitely not taking on the other operators head-to-head but is providing a significant amount of a new offering into that sector,” Davies said.
That’s in line with what is happening in Australia, where property developers like Stockland and Lendlease have branched out into retirement villages.
Fletcher sees its developments differing from most traditional retirement living offers by being designed as an integrated part of the surrounding community, rather than in isolation from it.
“We want to be integrated into the communities,” Davies said. “We think what will happen is we have already sold houses to families and a lot of those families in our communities would love to have their grandparents living closer by but maybe not with them, so we see some of those people potentially purchasing from us.”
The communities already have amenities such as golf clubs, bowling clubs and swimming pools close by, and some buyers may already live in the community but want a more modern purpose-built home, he said.
Over the next two to three years, Fletcher expects to ramp up to delivering between 100 and 150 retirement villas a year in Auckland and Christchurch, where it is already developing residential communities. It expects to deliver about 1000 units over the next 10 years.
Retirement villages have been criticised for their financial structure with most village owners selling residents a right to occupy, and retaining any capital gains when the units are resold.
Fletcher said its system would be fairer, with residents entering an occupational rights agreement with a 15 per cent deferred management fee, lower than most traditional villages. Ryman has a fee of 20 per cent, while the sector average is 30 per cent, according to analysts.
Residents would also share half of the capital gains, less the cost of refurbishment, from a sale, it said.
“People work really hard to build up their retirement nest egg, and they rightly want to balance protecting this with enjoying their non-working years,” said Steve Evans, chief executive of Fletcher’s residential and development unit
“Understanding this, and knowing people considering retirement living want to be supported by the right level of care while being surrounded by like-minded people became key drivers for us, as we developed our offer.”
Fletcher Retirement, trading as Vivid Living, is undergoing statutory supervisor due diligence and will apply for registration under the Retirement Village Act.
The company plans to build 27 single level villas at Waiata Shores and 48 single level villas at Red Beach, and a shared lounge, with ongoing maintenance provided by Fletcher Living.
Shares in Fletcher Building slipped 1.2 per cent to $6.87 in late afternoon trading on the NZX, and have gained 21 per cent so far this year.