11 Aug 2015

Warning over Auckland retirement units

3:36 pm on 11 August 2015

An analyst is warning there is a growing risk of an oversupply of retirement units in Auckland.

A young doctor holds an elderly woman's hand.

The demand for aged-care beds is expected to outstrip supply for the next 10 years - but there may be an oversupply of independent units. Photo: 123RF

While the demand for aged-care beds is expected to outstrip supply for the next 10 years, the balance is less certain when it comes to independent-living retirement units in Auckland.

Forsyth Barr director of research Jeremy Simpson said there were 50 percent more retirement units in the Auckland pipeline then there were 18 months ago, rising to 6000 units from 4000 units.

He said the increase could lead to an oversupply, if all the new units become available for sale at the same time.

Mr Simpson said that could result in lower than expected prices for new units.

Forsyth Barr has also lowered its outlook for Ryman Healthcare from outperform to neutral, although Mr Simpson said its portfolio of aged care beds and serviced apartments gave it defensive qualities relative to the other listed retirement village operators - Summerset and MetLifeCare.

He said Ryman was the best-placed to weather any Auckland-related supply and housing market concerns.

Dispute resolution for retirement village residents

Meanwhile, the Retirement Commissioner and the Commission for Financial Capability have set up a forum to come up with better ways to resolve disputes in retirement villages.

They have issued a report highlighting some deficiencies with the current system, such as:

The operators, who pay for the resolution panels, are also concerned about the cost and delays in getting resolution.

Many said they would be reluctant to initiate a dispute, not only because of the expense, but also the risk of reputational damage, and the disruption to other village residents.

Statutory supervisors also raised concerns about the costs, delays and the lack of alternative processes for resolving disputes.

Some lawyers said the panel process needed to be more accessible and user-friendly for older people.

They also thought simplified or alternative forms of dispute resolution could be used.

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