$22.5 billion in Aged Care homes needed but will it be achieved?

The estimates are conservatively based on the federal government's planning ratio which forecasts that 88 people in every 1000 people aged more than 70 years of age will need some government funding for aged care.

Calibre's research shows that to meet growing demand for assisted living and aged-care facilities Melbourne will require 32,252 more residential care places by 2031, Sydney will need 32,954 more places, Perth will need 9750 more places and Brisbane will need 17,000.

That's over 90,000 more residential aged-care places for those four cities alone.

"If we apply a fairly typical development cost of $250,000 per place, that's something like $22.5 billion in new development required," Calibre's head of Civil & Urban Brent Thomas said.

Operators such as Regis Healthcare, Ryman, Estia Health, Japara Healthcare, Bupa, The Village Group, Seasons Aged Care, Aveo Group, Uniting Care and Opal are just a few of the competing businesses looking to deliver the aged-care facilities across Australia.

The federal government's latest round of aged-care allocations locked in funding for thousands of new bed places with close to $1 billion annually, driving a wave of development across the sector.

Health Minister Sussan Ley approved more than 6000 home-care places, taking the total of aged-care facilities to more than 17,000 places.

Lack of suitable sites

However, Calibre expects the biggest hindrance will be local planning.

"Our dealings with various aged care or retirement living operators around the country identifies one clear and common problem: every one of them is concerned about a lack of suitably zoned sites, especially in neighbourhoods where we know demand will increase," Mr Thomas said.

"Partly this is the result of planning schemes which don't keep pace with present or future community need and partly it is nimbyism that fights against changed land uses in established areas," Mr Thomas said.

"But the consequence of supply shortages created by inflexible zoning or lack of political will are the same: prices will rise for available sites, and many seniors will be unable to afford the type of care they need in areas they want to live."

"Some might suggest a solution is to insist seniors housing move to urban fringe locations, but this is a Stalinist approach."

Read more: http://www.afr.com/real-estate/225-billion-in-aged-care-homes-needed-but-will-it-be-achieved-20160530-gp7qhr#ixzz4AGvvjyaA Follow us: @FinancialReview on Twitter | financialreview on Facebook

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