Ageing population increases aged care places

The sector, which is increasingly attracting the attention of large scale investors, has seen three major operators list on the Australian Stock Exchange in the past year.

“Regulatory changes have increased compliance costs for aged care operators, which has resulted in the need for scale – this has paved the way for consolidation,” says Phil Smith, national director of healthcare and retirement living at Colliers International. 

Colliers International is a global commercial real estate company offering comprehensive services to investors, property owners, tenants and developers.

“Recent activity in the sector has shown strong transactional value growth for aged care facilities, and given the current market fundamentals, this growth is expected to continue increasing,” Mr Smith says.

The strong market fundamentals are based around Australia's population growth, which is forecast to increase from 23.9 million to 39.4 million between now and 2055, over which time the number of Australians aged over 65 years will more than double from 3.6 million to 8.5 million. 

As life expectancies increase, there will only be 2.8 workers per retiree in 2055, compared to today’s 6.4 workers for every retiree. 

These trends will push the government to increase its spending on senior Australians as well.  

Tom Duncan, associate director of research at Colliers International, believes this consolidation and focus on economies of scale has led to a declining proportion of small aged care facilities. 

“Larger aged care facilities with more beds are becoming the norm, due to improved scalability and associated economies for facilities over 100 beds,” Mr Duncan says.