Village developers regularly state that they can’t access land for vertical villages because residential developers can pay more for a site as they make better profits, faster sales and obtain easier finance.
Quantity surveyor Matt Hemming, of Mitchell Brandtmann, presented a case study comparison on the competing costs of construction of vertical the retirement village versus an apartment block yesterday at the UDIA Retirement Breakfast in Brisbane.
His modelling resulted in an average cost of a village unit at $310-380K while the average apartment came out at $215-270K. Why? Two reasons: retirees demand more bedrooms and more facilities, resulting in bigger developments.
Matt gave apartment developers like Australand and Devine as examples who are now building projects with 50+% as one bedder units – which impacts all facilities, down to the number of car parks (ave. 45sqm in car parking in a village Vs 30sqm for an apartment block).
The average size of a village apartment is 75-100 sqm but the apartments now average 55-67sqm across the development.
This makes the average dwelling cost for apartments at $241K versus the average village dwelling costing of $350K. A difference of 45%.
The village has 73 sqm in facility space while the apartment has 53 sqm – 27% less.
His standard ratio of bedrooms looks like:
Village Apartments
1 bedder 10% 56%
2 bedder 74% 42%
3 bedder 17% 2%
While grim on the surface for village developers, the actual cost to build on a per bedroom basis is a different story. The village cost per bed is $169K compared to the apartment cost at $165K, a small 2% difference.
For retirement village developers, this becomes a marketing challenge. Potential residents selling a three bedroom family home can afford the apartment; demand and action needs to be elevated to create faster sales. It can be done - check out Michael and Justin Harrison’s vertical developments in Brisbane (click HERE).
