The good life: Summerset’s new $350m retirement village

Sunday, 20 October 2024

Standard apartments in Summerset Group’s newest retirement village in Auckland cost $1.4 million but that’s not bad for an Auckland home, the company’s chief executive says.

The village, which will be the NZX-listed company’s third largest with capacity for up to 450 residents, sits on a 2.6ha site in the coveted east Auckland suburb of St Johns.

It is being constructed in two stages, and once completed there will be 225 independent living units, 55 serviced units and 49 care and memory care suites.

The first stage of the village has been completed, and is made up of four multi-storey buildings, including many of the community facilities such as the cafe, bar, and pool.

Summerset chief executive Scott Scoullar says the first stage represents about 60% of the development, and while the village will not be officially opened until later this month, some residents are already moving in.

Despite the softer market, there has been significant buyer interest in the $350m, 45,000 square metre development, and he is happy with the sale rate, he says.

“One third of the units have pre-sold, and about $90m of sales contracts are in place. And now there’s a finished product for people to see, we are confident lots of potential owners will come and have a look.”

Buyers have a variety of options to choose from, ranging from one bedroom independent living units for $975,000, up to two bedroom premium apartments for $3.8m.

There are four penthouse suites going for $6m, while care suites start at $400,000 and serviced apartments are advertised from $710,000.

But Scoullar says standard two bedroom independent units make up the majority (60%) of the village, and they are priced from $1.35m.

“The premium and penthouse apartments are a niche product. Our core offering is much more affordable, and not too bad when it comes to Auckland prices.”

By way of comparison, CoreLogic’s latest figures put Auckland’s median price at $1.09m in September but leafy St Johns’ median price at $1.46m.

It makes Summerset St Johns considerably more affordable than some of the high end luxury retirement villages that have come on to the market in recent times.

Oceania’s The Helier, in the neighbouring suburb of St Heliers, has a starting price of $1.8m for its apartments, while prices for one bedroom apartments in Northbrook’s Wynyard Quarter development start at $1.45m.

On top of the cost to buy into Summerset St Johns, residents accrue a deferred management fee which is capped at 25% of the original purchase price over four years, and a flat weekly fee of $259 a week.

Scoullar says for many, the weekly fee will be less than the cost of living in their own home and paying for rates, insurance, utilities, and maintenance.

For the price, residents get a light, modern apartment designed according to accessible principles. All independent living units come with a garage space, and depending on their size many have decks and views.

Residents have access to the village amenities which include an indoor swimming pool and spa, cafe/bistro, bar, library, movie theatre, exercise facilities, beauty salon, resident concierge and chauffeur booking service.

On completion of stage two, there will also be a courtyard, a bowling and croquet green, and landscaped gardens, and eighty staff will service the village.

Co-ordinated activities such as film screenings, cooking classes, and quizzes will be on offer soon. Pets are allowed, and a dog wash facility is under construction.

Scoullar says the village is designed to be comfortable and homely, while keeping things vibrant and interesting for residents.

“Our whole philosophy is to ensure people feel they are at home in our villages. We want them to enjoy their lives here, and to support them to live a good life, rather than imposing a whole lot of rules to abide by.”

Stage two is due to be finished late next year, and further down the track 20 townhouses are planned for the remaining part of the site.

Scoullar says it has been a long journey since Summerset embarked on the development of Anglican Church-owned leasehold land in 2015.

Over that time, the company has dealt with Environment Court hearings and the escalation in building costs.

“But the development is on budget and on track, and I’m pleased with that, and with the village and what we are offering.”

He is also proud of the way Summerset has navigated the tough economic environment over the last year, and happy with its outlook, he says.

“Our balance sheet is strong and demand is strong, with enquiries up 20% on last year. If transactions take an extra month or two due to the slower market, it is what it is. The market will change.

“We are in a position where we can keep growing. Our New Zealand landbank will allow us to keep building more villages for a long time.”

Summerset has a portfolio of 39 villages that are completed or in development across New Zealand, and another six proposed sites.

In Australia, it has two villages in development, and five other properties in Victoria, and is looking at sites in Queensland.

But one area of concern for Scoullar, as with other retirement village operators, is aged care funding. He says it is terminally underfunded by the Government, and the result is a ticking time bomb.

The sector was given a 3.2% funding increase last year, but its costs went up by 11%, and that has left many operators struggling to stay open, he says.

“There are 55,000 beds across public hospitals and the aged care system, and 60%, about 30,000, of them are provided by not-for-profit operators.

“Those operators are being forced to provide fewer beds, or have less staff, while bigger operators like us are having to build half the size of what there is demand for because we are making a loss on our investment.”

As a result, 1000 beds were closed last year, and more will follow if the situation does not change soon, he says.

“It’s a big risk for Government because more closures will put a huge burden on the public health system, and leave us on a pathway towards there not being enough support for people in 10 to 20 years.

“In the words of Jerry Maguire, the Government needs to show us the money, or half the sector will close their doors, and once that happens they will never come back.”