Welcome to 2023: 3.6M potential customers but just 30,000 homes to sell

Welcome back to exciting days in the retirement living sector!

It is a new year, so we thought it would be worthwhile revisiting some of the fundamentals of business, and particularly sales.

The opportunities are almost boundless in the short term for both land lease communities and retirement villages, thanks to the sheer size of the potential buyer segment and the limit on the stock that is available to sell.

The chart above reveals the actual number of people in each age group. From age 60 to 84, we have 5.3 million people. If we divide them in half, as customers are likely to be mainly couples, we have 2.65 million potential buyers for land lease through to retirement villages.

But how much stock will we have to sell? The facts are that just 23,000 retirement village homes will come to the market in the next 12 months.

Land lease will have 3,000 new homes plus about 4,000 “pre-loved” homes come to market.

Combined, this is 70,000 homes – just enough to satisfy 2.6% of the 2.65 million potential customers.

Our research shows that just 3% of potential customers are seriously looking at retirement living at any one time – or 80,000 couples. On a monthly basis, this says 80,000 people are actively considering, but just 2,500 homes are available to sell (one twelfth of 30,000 homes).

The objective of every sales team could be to have an over-full sales funnel to allow for price escalation to optimise profits, which in turn will allow stronger village management remuneration and reinvestment in better services for residents.

The cloud on the horizon is that market potential will attract other accommodation models to satisfy pent up demand. We look to Build to Rent as an example.

Great times – but also not time for complacency.

Happy New Year.