The announcement on Monday that the Retirement Village Association (RVA) and the Property Council are in advanced talks of a partnership came as a surprise to many – including some members - but not to those who have been following the trials and tribulations of the various ‘peak’ body associations.

Consider this: what are retirement villages and what do they do.

The answer: they are property developments that provide specialist accommodation solutions to ageing Australians.

So it is logical to be represented by the Property Council – the peak representative body for the property sector, one assumes. But villages are different to apartment blocks and greenfield sites where the developer builds, sells and leaves.

Here the developer builds a dedicated estate that comprises of 70% homes and 30%+ of community facilities, then builds in extra design elements to support a frailer resident. At best the operator makes a 15% development return over a ten year development journey and then commits to stay with the customer, providing support, through their later stages of life, making no income until the resident leaves – an average period of 9 years. The operator in effect becomes a benevolent carer for new residents entering at between 73 and 80 years of age, with declining health.

There is no government support for this service. At the same time the operator is overseen by the most stringent regulations and legislation in the accommodation sector.

So ‘property’ and ‘people’ are intertwined, an emotional mix that needs to be managed very carefully. Overlay this with slow village sales and there is pressure all round.
The sector, which can now add the re-emerging rental villages of Ingenia and Eureka, plus the growing Home Parks, needs more resources and increasing sophistication in its services – to members, to residents (and their associations), plus to work with Governments at local, state and Federal levels.

This has been understood by the progressive village operators, with RVA membership growing each year since Andrew Giles took over as CEO. Not For Profit operators have gone from close to Nil to 45% of the RVA membership under his guidance, for instance.

But the RVA still represents (and thus has an income base of) just 800 of the 2,200 retirement/rental/Home Park villages across the country. Where are the rest?
The predominantly Not For Profit associations, Aged & Community Services Australia (ACSA) and Leading Aged Services Australia (LASA), understandably are consumed in the delivery of care – residential and otherwise – which is a high risk/low surplus business with huge staff/funding/accreditation challenges. Villages get low priority – and the RVA has been doing the heavy lifting for the whole sector anyway.
Many small operators haven’t joined the VRA because - the RVA has been doing the heavy lifting for the whole sector anyway.

So what does the Property Council bring to the marriage? It has infrastructure – which immediately reduces office and other service overheads. (RVA President Simon Owen points out that currently just 50 cents in each dollar goes to advocacy but if approved, the new structure frees 80 cents for services and advocacy).
The Property Council also brings expertise and research services already in place, generating policy initiatives at a marginal extra cost. They also have a 40 year track record of merging satellite groups such as the Shopping Centre Council into their structure and then working with all levels of Government.

The combined strength will not be missed by the finance sector either – as it points to a maturing of the sector.
Finally, one can’t neglect the majors – the Stockland’s, Lend Leases and FKP. They are already members of the Property Council and so they are likely to continue to be engaged at an Association level. The move takes away a considerable threat of their abandoning the RVA given they already do a lot of its core functions in house – staff education, legal work etc. Equally the progressive and increasingly large Not For Profit operators, like IRT, will find exposure to the Property Council beneficial – as will small operators who will have access to the resources and thinking of the top end of town.

Over the next two weeks Simon Owen and Andrew Giles of the RVA, and Ken Morrison of the Property Council, will be visiting each state to present the marriage proposal to RVA and Property Council members. The argument is compelling.