Australia’s aging population is estimated to need 69,000 more aged care places by 2022, a fact that is driving consolidation and growth in an industry that has historically been made up of smaller independent operators. 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.
Colliers International has released a new report “Healthcare and Retirement Living, Research and Forecast Report 2015” to investigate the key trends within the aged care sector.
“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,” said Phil Smith, National Director of Healthcare and Retirement Living at Colliers International. “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.”
The strong market fundamentals are based around our 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 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,” he said.