0:09

Hello and welcome to Talking Property

0:11

with CBRE. I'm Kathryn

0:13

House, your podcast host, and today we'll

0:15

be exploring a bit of a different topic: land lease

0:18

communities. If you tuned

0:20

into our reporting season podcast back

0:23

in early March, you might recall we

0:25

briefly discussed the growing investor

0:27

interest in this type of housing product, which

0:30

allows buyers to purchase a new

0:32

home on land for which they pay

0:34

rent. It's something that's

0:36

become an increasingly sought after option for

0:39

retirees and for some first home

0:41

buyers with around 130,000

0:43

Australians living in these estates.

0:46

In fact, this $12 billion sector has

0:49

been tagged as the fastest growing solution

0:51

for downsizers in Australia. But

0:54

what exactly is a land lease community?

0:56

What are the pros and cons of buying into them. How

0:59

much growth is likely in this sector and

1:02

why is it rising on the radar of local

1:04

and offshore institutions and developers?

1:07

To find out, I've invited Kate Melrose from

1:09

the Ingenia Communities Group onto the program. Ingenia

1:12

has been working in this market sector

1:15

for many years now and is recognised

1:17

as one of the pioneers. Kate

1:19

joined Ingenia in 2014 and

1:21

is responsible for stakeholder engagement

1:23

and innovation. Welcome Kate.

1:26

Morning Kathryn. Thank you for having me on.

1:29

Our other guests are CBRE's Liam

1:31

Greentree and Kat Hale. Liam

1:34

recently joined CBRE as a director within

1:36

our Alternative Assets Valuations team

1:39

and is a leading national expert on

1:41

land lease communities. Great to have you

1:43

join us Liam.

1:44

Thanks Kathryn. Glad to be here.

1:46

And Kat was recently promoted to head CBRE's

1:49

Residential Valuations team in Australia

1:51

... congrats Kat ... and is going

1:53

to give us a download on a

1:56

recent CBRE valuer survey which shines a light

1:58

on the ever-pressing need for more affordable

2:00

housing options. Nice to have you

2:02

with us.

2:03

Thanks Kathryn. Great to be here.

2:05

So Kate, maybe I could start with you. What

2:08

exactly is a land lease community?

2:10

How different is it, if at all, to

2:12

a manufactured housing estate or caravan

2:15

park, dare I say trailer park? Or entering

2:18

an over 55s development or retirement village?

2:21

I've heard the Ingenia model being described

2:23

as lifestyle rental.

2:25

Yes, Kathryn I think the land lease

2:27

space over the last 10 years has seen tremendous

2:30

growth and change. When I started with Ingenia

2:32

some 10 years ago, we'd not sold a land lease lot. When

2:36

I look at the massive growth in

2:38

the sector over the past 10 years and

2:40

the maturing of the product being

2:43

brought to market and the level of sophistication

2:46

of that product as a lifestyle offering,

2:48

it really has transformed in the last 10 years,

2:50

not only from its offering to the consumer,

2:54

but from an institutional investment perspective. Investors

2:57

have really seen it as a very viable, plausible

3:00

solution for affordable housing and as

3:03

an attractive asset class. We've seen

3:06

Stockland and Mirvac come into the space seeking

3:09

really proven resilient income streams, long yielding

3:11

tenants, 100% occupancy and it's

3:14

underpinned by compelling market

3:17

fundamentals. It's

3:20

an aging population with an affordability

3:23

constraint. So, the sector

3:25

has seen huge growth and as

3:28

its awareness is growing dramatically,

3:30

we're seeing a lot more institutional capital come

3:33

into the space. What is it? It

3:36

really is a very simple model. It's

3:38

a simple model where you've got institutional ownership

3:40

of the land and purchasers

3:43

purchase the home that sits on that land. So,

3:45

from a consumer perspective, you buy a

3:47

home, you lease the land, that lease is in

3:49

perpetuity unless mutually agreed. And

3:52

as part of that you get to cash

3:54

out of your previous home. So, we

3:57

have a grey tsunami coming through. Australia's not

3:59

unique in that. We've got a tidal

4:02

wave of downsizers sitting in homes

4:04

that really are under

4:07

utilised bedrooms, but they're looking

4:09

at how do I cash out? How do I fund

4:11

the kids onto the property market? How do

4:14

I get a better engagement and lifestyle in this

4:16

post Covid world? And baby boomers

4:19

are far more discerning. They're wanting a simple

4:21

model, and the land lease space is

4:23

as simple as, you purchase your home, you lease

4:25

the land on which it sits and you pay a weekly

4:27

rent. So there's no stamp duty going in,

4:30

there's no exit fee when you

4:32

leave. It's a very affordable and

4:34

simple model with very predictable costs for

4:37

the consumer, which then translates

4:39

into, from an investor or

4:42

an operator, very consistent revenue line

4:44

and rent.

4:46

So exit fees. That's one thing with the

4:48

over 55s type of development isn't it?

4:50

You do have to pay an exit fee?

4:52

Look, if you're comparing it with a

4:54

traditional retirement community, the

4:56

retirement sector in Australia has a 6 -7% penetration rate,

4:59

it's quite a complex

5:01

structure and what I would say is

5:03

Australian downsizers need more choice.

5:05

So we need more retirement communities,

5:08

we need more land lease, the consumer needs

5:10

more options. But the land

5:13

lease sector really provides a very

5:15

simple solution where you only pay

5:17

what you want to pay for your home and

5:19

your rent. So homes in

5:21

the sector generally vary anything from $300,000

5:23

at the very affordable end, up to

5:25

well over $2 million at the more

5:28

sophisticated end of the sector. And your rents

5:30

generally are in the high hundreds to low

5:32

two hundreds a week. So there's no

5:34

exit fee, no entry fee, no stamp

5:36

duty. If you're comparing that with the retirement community under

5:39

the Retirement Villages Act, it has

5:41

in-going contributions, ongoing contributions,

5:44

exit. You may not keep

5:46

100% of your capital gain subject to your

5:49

contract. So it presents a very

5:52

simple solution from a legislative or a

5:54

contractual perspective for the consumer, but it also

5:57

provides a very strong lifestyle. It's really

5:59

targeting a baby boomer who is

6:02

pretty discerning. They're really focused on yes,

6:04

I want to know there's a continuum of care solution if

6:06

I need something in the future but I just want

6:08

to get on and live life, I want to cash out, get some more money

6:10

in the bank, help the kids onto the property ladder

6:13

and really get on and start living a really enriched

6:15

fun life.

6:16

And I think the key word is lifestyle.

6:19

Basically, the target demographic

6:21

is people, who might still be working

6:24

part-time or on a casual basis, but

6:26

it allows them to free up capital by selling their

6:28

home so they can enjoy their retirement

6:31

years. You know, they're still active. There's

6:33

a lot of facilities which are provided on site,

6:35

being tennis courts, bowling greens, pickleball

6:37

courts, swimming pools, and they

6:39

might provide aqua aerobics, yoga classes,

6:41

pilates. So there's a number of key

6:44

benefits they wrap into these communities to allow these

6:46

retirees to really enjoy the golden

6:48

years.

6:51

I agree with that Liam. And also a

6:53

lot of these people may have been coming from an older

6:56

home that needed the maintenance

6:58

and everything they need to look after into something that is

7:00

new and and low maintenance so they can go and

7:02

enjoy the lifestyle and all the wonderful

7:04

things that are offered in these communities.

7:06

That's exactly it Kat. I'm

7:09

blown away walking into some of the display

7:11

homes at the moment, now I get a bit envious of

7:13

the people moving in.

7:15

I was about to say that, I'm feeling really envious <laugh>

7:18

And I think Kathryn to your point, you know

7:20

the sector has evolved. Yes, there is the

7:22

highly affordable caravan park, conversion

7:24

style housing solution and it continues

7:27

and needs to continue to service at the affordable

7:29

end of the market. But the level of sophistication

7:31

of the lifestyle offering. These are resort-style

7:34

communities, with rich, engaged

7:37

community activities and social programs. So

7:40

the impact of that is

7:42

we've got really strong preventative health, health

7:45

and wellness, really good mental

7:47

health implications for the residents.

7:49

They're living in a caring

7:51

connected community that underpins our wellness, our wellbeing and

7:55

longevity.

7:57

I was going to say too, it seems to have been

8:00

a sector that has flown under

8:02

the radar and there have

8:04

been some recent big deals, among

8:06

them Mirvac Group’s partnership acquisition

8:09

of one of Australia's leading land lease operators

8:11

for just over a billion, and HMC

8:14

Capital and Canadian Pension Plan Investment Board

8:16

have recently increased their stakes in

8:18

Ingenia. Liam, why do you think this

8:20

sector is becoming so attractive to some

8:22

of these local and offshore groups?

8:25

Great question Kathryn. I

8:27

think it really became evident of

8:29

how appealing this asset class was

8:31

due to Covid. So during Covid

8:34

there was a big shift from these funds

8:36

looking into alternatives because there were some

8:38

impacts to cash flow and returns on the

8:41

traditional property asset classes like office, retail,

8:44

industrial and so forth. But

8:46

during Covid you still had 100%

8:48

occupancy in these communities, you still

8:50

had your rent paid. So there

8:53

was no impact to the cashflow at all. And

8:55

when you look at the thematics

8:57

behind land lease communities, it effectively is a build-to-rent or

9:00

BTR project but you are making

9:02

a minor development profit along the way.

9:04

So, Kate and I over the past couple weeks

9:07

have just been referring to it as horizontal BTR so

9:10

it is incredibly appealing. It's an

9:12

annuity style income, you have annual rent

9:14

increases for these retirees and

9:17

they get a portion of that

9:19

rent paid by the Commonwealth Government. So it's pretty much

9:21

a win-win for everyone.

9:25

I think it's interesting too, there's a

9:27

Living Sectors summit in Sydney later this

9:30

year that's going to feature land lease

9:32

and that summit previously focused purely on the

9:35

build-to-rent sector. So I guess that

9:38

will help broaden this understanding of the product.

9:42

Yes Kathryn, I think that really does demonstrate

9:45

that the land lease sector is part of the housing

9:47

solution and not only is it potentially freeing

9:49

up the downsizers from their homes, it

9:52

really is starting to provide a

9:55

very quick speed to market horizontal

9:58

solution. It's underpinned by institutional capital,

10:00

it provides a hybrid build-to-rent build-to-sell. Each

10:03

individual home is a combined sale

10:05

and lease and in that

10:08

it needs to start to be considered as

10:10

part of the great housing solution and

10:12

part of the puzzle to solve the housing crisis in

10:14

Australia.

10:15

Like so much in housing, supply in land lease looks

10:17

like it's still falling short at

10:20

the moment. I was reading a

10:22

report this year which flagged that if land lease communities

10:24

accommodate just 2.5-3% of

10:26

those aged 50 to 84, the

10:30

sector's going to need another 2,800

10:32

to 3,800 homes every year until at

10:34

least 2041. So, how do we get that

10:38

extra supply going in the land lease sector?

10:42

Kathryn, I think as the sector

10:45

has matured and awareness has increased, it's

10:47

proven itself as a really popular

10:49

and in demand product. It continues to attract

10:52

institutional capital and I think government is

10:54

starting to catch up and

10:56

realise that there is real need for planning reform and

10:59

to appropriately zone land for this.

11:01

It is a complex legislative framework

11:04

and probably doesn't reflect the

11:06

new era of lifestyle communities that are

11:08

being offered in this space. So

11:10

across the states, there are discussions happening

11:13

and reviews, but I think it's

11:15

really time to start to look

11:18

at how we get more land lease

11:20

supply coming through because to meet the

11:22

2-3% penetration rate we're falling well short

11:25

with current supply.

11:30

And just on that, that's just to maintain

11:33

that penetration rate of circa

11:35

3%. If market appetite and

11:38

interest increases on that, we need

11:40

to double our supply straight away to 6%.

11:42

So I've seen some data

11:44

coming out in the States and around 8% of the US

11:46

population lives in these communities. So that's

11:49

over 20 million people, and the majority of

11:51

those are actually in all age communities.

11:53

So it is available for people 18 to the retirement

11:55

years. So there's definitely demand on

11:58

both a retiree framework as well as an

12:01

all-age framework.

12:04

Do you have many young people coming in to

12:06

these estates, Kate? I know we've talked a

12:08

lot about the the grey tsunami, but is

12:10

there a young population

12:13

coming in?

12:13

Look, Kathryn, in the US only 50%

12:16

or 40% of land lease communities are

12:18

actually purchased by over 55s. So it really is

12:21

a housing solution that plays to

12:23

seniors and all ages. In Australia, it's predominantly

12:26

played to a downsized market

12:28

because of the limitation

12:30

in providing funding for a

12:32

land lease home in Australia. Now you

12:35

do have new finance providers, land lease

12:37

home loans looking to provide mortgages in

12:40

the space, and I think as the

12:42

sector now comes onto the radar we're going to

12:45

see a lot more solutions and we need to be

12:47

having conversations around, is it a solution

12:49

for all ages in Australia? Is it a way

12:51

if we can bring together creative thinking

12:53

from banks and institutions and

12:56

look at potentially expanding this to

12:58

all ages. I do think that conversation needs

13:00

to mature in Australia.

13:02

It's interesting that you talk about the mortgage

13:04

side of things. I was reading a

13:06

couple of recent Financial Review articles. In one

13:09

of them Mirvac's Campbell Hanan was

13:11

talking about the need for a product

13:14

that allows you to buy a house only, with no

13:16

land. So you're effectively divorcing the

13:18

land from the cost of building the house. His argument

13:21

is that it would make first home buyer purchases

13:23

cheaper and in theory that

13:25

would let first homeowners start building equity,

13:27

which I think is a real issue right now

13:30

with our affordability crisis. And with no

13:33

land or security it would be like a car loan,

13:35

but cars depreciate in value,

13:37

unlike land which appreciates. Stockland

13:39

CEO Tarun Gupta

13:42

also raised the topic at a recent

13:44

UDIA conference questioning why buyers

13:47

in the US could get a loan for a home in a land lease community

13:49

but in Australia that's quite difficult. Liam,

13:51

give me your thoughts and

13:53

I'd be keen to hear from you on this front also, Kate.

13:56

I think Campbell and Tarun

13:58

make a great point that there's

14:01

really only one mortgage product

14:03

available in the sector at the moment, which was

14:05

started by Andrew Ralph, an ex ANZ banker.

14:08

But basically he's just providing sort

14:10

of a bridging loan for some retirees to

14:12

cover a minor portion of the entry

14:14

into this. But really I

14:16

think there is unlimited potential

14:19

to bring in a suitable mortgage product and

14:22

they make the great point of, if you can

14:24

get a loan for a car, which

14:26

is a depreciating asset, you're effectively

14:28

getting a loan on the home but it's still sitting

14:30

on the land which will appreciate

14:33

over time. And typically you

14:35

have a contract which allows you to occupy

14:37

that home on that land for a 99-year

14:40

tenure, which is not too dissimilar to

14:42

buying a house in the ACT for example.

14:44

So there is still security of tenure

14:47

for the home being located on the land

14:49

which will appreciate over time. And even operators

14:52

such as Lifestyle Communities in Victoria have

14:54

a lot of data on this, which actually shows

14:56

house price appreciation within their communities

14:58

and they've been tracking the market for over

15:01

20 years. So there's some great

15:03

data which is starting to come out on that.

15:05

I think there's two very important points there, Liam.

15:08

One is that the inherent value of the

15:10

home is on the land in the context in

15:13

which it sits with the inherent community

15:15

facilities and lifestyle proposition. Unlike a

15:18

car, and although it is fundamentally a chattel,

15:20

unlike a car, you can't drive it away, it

15:23

can't just drive off down the street. So the

15:25

level of security of tenure

15:28

for the mortgage is far more substantial.

15:31

I think the second thing is yes, across our

15:33

experience at Ingenia we've seen constant price

15:35

growth for the same dwelling

15:38

and there's many, many examples

15:40

where people have purchased into a community,

15:42

call it $500,000 and sold out at

15:45

$800,000. There's been really substantial price

15:47

growth across the sector in the last couple of

15:49

years on same dwelling. And

15:52

I think you will see that in the US

15:54

there's a common thread in that as well. So although

15:56

Australia has a mindset that unless you own the land,

15:59

the asset will depreciate, the asset

16:01

of these land lease assets are in the

16:03

context of the environment in which they sit.

16:05

And so they are seeing capital growth quite

16:08

substantially and I think that will be true if it's to

16:11

expand to be a major sector.

16:13

So financing, I guess one

16:15

of the cons potentially. Are there

16:17

any other cons that people

16:19

should consider when they're buying into these communities? Some

16:22

of the areas I've seen raised are the potential

16:25

for additional fees on top of lease costs, needing

16:28

to ensure that if you want to live in the home past the

16:30

end of the lease, that that option actually exists and

16:33

potentially regulatory or planning issues. What should people

16:37

be considering, Kate when they

16:39

do go to move into one of

16:41

these communities?

16:43

We often say you need to go and try and buy, you

16:46

need to go and feel the community, because you're purchasing

16:48

a home but you're also purchasing a lifestyle

16:50

and the community in which it sits.

16:53

So I think you've got to be mindful of

16:56

the legislation. The legislation

16:58

is very simple. It's a simple land home

17:00

contract with a land lease attached and

17:04

when you compare that with other housing

17:06

solutions for downsizers, it is very,

17:08

very simple. Is there a downside?

17:11

Probably the downside is that many

17:13

people are wanting them in more inner urban locations

17:16

and they just don't exist. There's not an opportunity

17:18

for them to exist from a planning framework

17:21

and we're constantly getting inquiries

17:24

for people who really aspire for

17:26

a lifestyle experience but

17:28

want to stay in the community that they know and love and

17:30

that's one of the challenges that the sector's facing at

17:32

the moment.

17:34

So Kat, we've talked a lot about affordability

17:37

on the podcast and that

17:39

really came to light, the issue of affordability,

17:41

out of our recent residential valuers’

17:43

survey. t's the first time we've done it, you

17:46

polled 190 of our valuers

17:49

and 78% of them said that

17:51

they expect house values to increase over

17:53

the next 12 months with the highest

17:55

growth expected in Perth, Sydney

17:58

and Adelaide. It

18:00

really does show that need for more

18:02

diverse affordable housing options. Perhaps

18:05

could you talk us through some of the key

18:07

findings?

18:08

Sure, thanks Kathryn. We were so excited

18:10

to launch our residential valuation

18:13

survey and I think the key thing about

18:15

the survey is that it was conducted by

18:17

our valuers that are on the ground seeing

18:20

what's going on in their local markets every

18:22

single day. Now our valuers work

18:24

really tight geographical patches and they

18:26

know their markets really, really well. That

18:28

78% is a pretty

18:31

scary stat. Sydney has always been

18:34

a really popular place to live, you know, work,

18:36

lifestyle, transport. So it

18:39

doesn't really surprise me that we expect

18:41

to see continued growth here, but

18:43

affordability remains a key

18:45

issue. I think worth highlighting that

18:47

seeing the growth in Adelaide and Perth

18:50

doesn't really surprise me. They

18:52

haven't had the same levels of growth in comparison

18:54

to say Sydney over the last few

18:56

years. But they're definitely seeing more

18:58

activity there. So people that may

19:00

be priced out of Sydney or

19:03

Melbourne are now looking at more affordable

19:05

options. So maybe Perth or Adelaide

19:07

where they can maybe buy a freestanding house

19:10

over an apartment. Or we might even see

19:12

that we've got investors from say Sydney,

19:14

that are then going, okay, well I can go and

19:17

buy an investment property in Perth.

19:19

But what that does is it drives up the market

19:21

for the locals that are already living there because

19:23

you've got your purchasers from the east

19:26

coast, which look at Perth and

19:28

Adelaide as being more affordable, that then end

19:30

up driving up the market. So yes,

19:32

affordability remains a really, really

19:34

big problem for residential property. We're gearing

19:37

up to launch our Q2 survey so

19:40

it'll be really interesting to see the comparison

19:42

between the Q1 and the Q2 findings.

19:45

Hopefully not such a scary figure next

19:47

time around.

19:48

I agree with everything you said Kat

19:50

and I just feel like it's going to be a perpetual

19:53

cycle of this being an issue and probably

19:55

what we're talking about now is going to be far worse

19:58

in the years to come and that's why

20:00

I think a land lease product can ease

20:02

some of these issues on a macro level.

20:05

So why do you think that government isn't

20:07

more focused on the land

20:09

lease sector as one of the solutions

20:11

for the affordability crisis that we're in?

20:14

I just feel like it's been flying under the radar

20:17

for a couple of years and basically in

20:19

Sydney, for example, there hasn't been really any

20:22

development of this product within the Sydney metropolitan

20:24

location. However, it has boomed in places

20:26

like the central coast of Newcastle. I do believe

20:29

it still is an education piece, but like anything,

20:32

see how the

20:34

home and the education of this

20:36

product has developed over the past five to 10

20:38

years. It's only going to improve year on year

20:40

from here on in.

20:42

And I think Liam, as the next generation

20:44

of land lease communities are delivered

20:47

in all their glory, I think that

20:49

will really start to transform the misconception

20:52

that these are trailer parks, caravan

20:54

park conversions and it's

20:56

going to really start to become a mainstream

20:59

housing solution. I do think government

21:01

is suddenly realising that, hang on, there is something

21:03

over here that we need to be considering and

21:05

having conversation about. And it is a

21:07

hybrid build-to-rent, build-to-sell, horizontal

21:10

model which does provide

21:12

real speed to market solutions, so this

21:14

housing crisis needs speed

21:16

to market. We've got build-to-rent conversations

21:19

about vertical villages, which is fabulous and

21:21

institutional ownership of land, but

21:24

it takes a long time to get a vertical village to

21:26

market to build it, to deliver. At

21:28

the end of the day, as a community broadly,

21:31

we all need to be focused on getting more heads on

21:33

beds, more affordably, more quickly. And

21:36

land lease really provides an opportunity to

21:39

deliver housing both through modular and more

21:41

build on site solutions. But the

21:44

land lease space has speed to market capability,

21:46

it has real expertise in modular housing and

21:49

is really expert at running

21:52

and operating communities that

21:54

deliver a great experience for the occupants. So

21:56

I think we are coming onto the radar

21:58

both from a consumer, from

22:01

a government and from an institutional

22:03

investment perspective. And I think with Stockland

22:05

coming into the market, the sector is really

22:08

poised for quite rapid growth and capability to

22:10

deliver solutions.

22:12

Heads on beds. I like it. So

22:15

Liam, you mentioned rent assistance earlier, Kate,

22:17

can you talk us through that and what that involves with

22:20

land lease communities?

22:21

Yes, certainly Kathryn, it's one of the unique factors with

22:24

land lease communities because the purchaser

22:26

leases the land, if they qualify

22:28

for a pension, they may

22:31

also qualify for Commonwealth Rent Assistance,

22:33

which is a contribution to cover a portion

22:35

of their weekly rent. We talked earlier,

22:38

weekly rents may vary between about $180

22:41

to maybe $220 a week. And

22:43

if you qualify for the pension your Commonwealth

22:46

Rent Assistance will cover a portion of that subject

22:48

to whether you are a single or a couple. The

22:50

other factor about Commonwealth Rent Assistance

22:53

is from an investor's perspective, your

22:55

rental income, which

22:58

at the moment is largely a hundred percent occupancy

23:01

is underpinned by government payments. So

23:03

it really gives greater certainty to that

23:06

rental annuity stream that investors are so

23:08

looking for.

23:09

One final question I did want to explore

23:11

was, we have talked about this as

23:13

being an affordable product, but

23:16

when I was doing a little bit of research, I'm

23:18

seeing you can buy in from say $400,000,

23:22

but some of the premium resort style

23:24

facilities are now selling, the homes are

23:26

selling for over $2 million. Where you're

23:28

getting access to your facilities like theatres

23:31

and bowling greens and gyms and pools. So

23:34

where do you see the biggest growth in the sector?

23:37

Is it at the affordable end or is it at the premium

23:39

end?

23:40

Kathryn, I think as the sector matures, you'll

23:42

see growth right across the pricing spectrum. You'll

23:45

see there's real demand at the affordable end.

23:48

As it's becoming mainstream and people

23:50

are becoming aware of the lifestyle proposition, you're

23:52

seeing really deep downsizer wallet

23:55

freeing up capital. Now while we're saying $2

23:57

million is expensive for a land lease home, it's

24:00

relative. If you are selling out of a $3

24:02

million home, you are cashing out a million dollars,

24:05

often that's going to helping the kids onto the property

24:07

ladder and you've got some

24:09

money in the bank. If you're purchasing in

24:11

the land, Ingenia average prices

24:14

in the $500,00-$600,000 price band.

24:16

So a lot of those people are cashing out at $800,000.

24:19

So it's about relative

24:22

affordability and enabling

24:24

people to cash out. So I

24:26

think you're going to continue to see as this

24:28

sector matures, real demand at all levels

24:30

of the spectrum. Some of the operators

24:32

are really focused on playing in the mid-market and I

24:35

think you'll see real growth right

24:37

across the pricing spectrum.

24:40

And just adding on that Kate, I think the

24:42

key factor for this being

24:45

an appealing product is it literally caters for

24:47

everyone at a large range of the

24:49

price point. So basically, you can have

24:51

people buy in at $400,000 or $2 million. It allows a

24:54

lot of people to consider this as a

24:56

retirement option.

24:58

And I think what's great is if it's

25:00

already built, you don't need to go through the

25:02

whole individual building process. You

25:05

know, there's delays with construction,

25:07

getting planning permits through and all

25:09

of that. You're moving into this wonderful community

25:12

that's already built with all these incredible facilities.

25:14

So I can see this being a

25:17

way to help solve our housing affordability

25:19

problem. We're getting people out

25:21

of the homes that they're in, into these

25:23

new lifestyle communities, which

25:26

then frees up more supply of

25:28

the existing homes that might be close to the

25:30

city centres where you've got people that do

25:32

very much want to live.

25:34

There's an added social economic

25:36

and health impact too Kat and

25:38

that is you've got the operators operating

25:41

these communities that are taking on board a lot of

25:43

the services that councils sometimes provide

25:46

to residents in a community. So

25:49

they're providing really strong social programs

25:51

around health, wellness, preventative health,

25:54

and you’re seeing the social connection and

25:56

the impact of that on health and wellness. The reduction on

25:59

mental illness as well as the increased

26:01

exercise program has really strong

26:03

health benefits as well. So I think

26:06

we need to look at, and BDO did a great research piece

26:08

last year looking at the social and economic impact

26:11

that this sector has. It's now

26:13

a $12 billion sector, it's coming into

26:16

focus and it has a great

26:18

opportunity to grow and deliver

26:20

solutions for the housing sector.

26:23

Kate, do you think there's any hesitancy from people

26:25

to sort of go, oh I'm not sure about this, this

26:28

land lease, the great Australian dream is

26:30

to always buy your own plot

26:32

of land. Is it hesitancy? And

26:34

then the whole awareness piece and the education

26:36

piece will help people to understand

26:39

how it all works because it all sounds

26:41

amazing. I'm in.

26:43

I'm in too!

26:44

Wellness and yoga I'm in. But do

26:47

you think generally in the market that traditional

26:49

sense of the great Australian dream,

26:52

is there resistance or hesitancy?

26:55

Absolutely. There has been over the last 10 years

26:57

in conversations with downsizers, there's

26:59

concern, "well, hang on, I don't own my land". The

27:02

minute they walk into a community, they

27:04

meet with people that are living this engaged

27:07

life with a sense of belonging and purpose,

27:09

all of which are basic fundamental principles

27:12

that, you know, according to Blue Zones underpin

27:14

our longevity, health and wellness, is

27:16

really compelling. And at

27:19

the end of the day, they're also tangibly seeing where

27:21

the price growth in this sector is going. That's

27:23

a function of supply and demand. We cannot

27:25

get enough communities to market to meet the

27:27

tidal wave of downsizers. So the

27:30

supply demand equation is continuing to

27:32

drive price growth. So it's almost proven

27:34

itself that sense of,

27:36

I have to own my land to

27:39

have price growth. The market's proving that

27:41

it's still compelling and it really

27:43

is, is offsetting that traditional concern and

27:45

it's now become a very mainstream solution.

27:49

Well it's certainly going to be an interesting

27:51

area to watch. Thank you so much for

27:53

your time, Kate, Liam, and Kat. I've

27:56

got a much better understanding of the sector

27:59

and Kat I'm really looking forward to seeing the results of

28:01

the next valuer survey. So

28:03

thanks everyone for tuning into this latest episode

28:06

of Talking Property with CBRE. If

28:08

you want to find out more about the recent valuer survey

28:10

we mentioned, you can find a link in our show notes.

28:13

If you like the show and want to check out more, visit cbre.com.au/talking

28:18

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