Making life easier for an ageing population

WHEN Aussies quit working, there’s often one of two RVs in their future.

One is a Recreational Vehicle: a caravan or campervan for the Grey Nomads. The other is a Retirement Village.

There’s another option: a “lifestyle community.” Not necessarily retired, just over 55.

One of the biggest operators in that field is Ingenia, an ASX-listed company with around 100 properties owned or operated across NSW, Queensland, and Victoria.

In charge of the portfolio is 60-year-old Chief Executive John Carfi.

And before you ask whether he’d live at one his company’s properties, the answer is, “In a heartbeat!”

Well, he would say that. But John really means it. “The question most of our customers ask themselves is, ‘why didn’t we do this earlier?’”

Ingenia’s near $3 billion investment includes holiday parks and rentals. But the focus of this article is the over-55 downsizers.

Which is ironic as that’s the age at which John originally planned to retire.

Born in Italy, he migrated with his family to Melbourne at the age of two-and-a-half.

They moved around but settled in country NSW, where his dad restored classic cars (“a rusted-on Ford family.”)

John started as a cadet engineer with Lend Lease, rising to operations manager, switched to Mirvac and became CEO of residential development.

Then he moved to Dubai with Emaar Properties, the developer of Burj Khalifa, the world’s tallest building.

“An absolute ball,” he says, “because you got to play with big toys and build a lot of stuff.”

Semi-retirement to non-executive roles didn’t suit. He joined Ingenia two years ago.

“You spend the best part of 30 years learning something,” he says. “It seemed a shame to shelve it.”

He found booming demand, with Australia’s population rapidly increasing and ageing. But also, some mistrust about retirement housing.

Complaints included complex contracts, monthly costs, end-of-term refurbishment, and exit fees: Deferred Management Fees.

A DMF is a percentage of the entry fee that the operator retains when the occupant leaves, sometimes up to 60%.

Ingenia’s solution is the Land Lease model. That’s where you pay upfront for the house, but not the land.

There’s a monthly or weekly rental to cover council rates, maintenance of the grounds, clubhouse, pool, gym, and tennis court, and a community manager.

You pay your own utilities and insurance. But no stamp duty, no strata levies and no DMF (except at certain Victorian properties).

“When you exit, you sell the house and take the full capital gain,” John explains. “If you buy for $500,000 and someone’s prepared to pay $600,000, that’s $100,000 you’ve made.”

Typical purchasers are a couple in their late 60s moving from a home of, say, 40 years, where maintenance is a burden and the neighbourhood perhaps not so neighbourly.

Prices range from $475,000 to $1.8 million, plus up to $10,000 a year or $833 a month in rent.

John reckons it’s a good deal. “If you think of the council rates, you’re no longer paying maintenance and all that; your outgoings aren’t all that significant.”

And, about a third of Ingenia’s clients qualify for government rent assistance.

There are no refurbishment charges on departure. If owners die, the property becomes part of their estate.

There is no transition to nursing home care. But Ingenia offers free help with the available options.

John accepts that many will resist a move to retirement living. They worry about the cost and hassle of selling up, separation from family, friends and neighbours.

“The biggest obstacle, to us, is people doing nothing,” he says. “‘Oh, I’ll wait another year.’

“They’ve got to make the lifestyle decision. What prevents them from doing it earlier, is this stigma that a) they’re caravan parks and b) there’s a hidden fee. There isn’t: it’s completely open.”

One possible selling point is that lifestyle community owners could have longer, healthier lives.

Not just that they’re safe, with less work, but with more activity and social interaction.