Grant Thornton report on retirement villages sector dispels myths
23 June 2025
A Grant Thornton report on retirement villages profitability presents a fair assessment of the financial realities facing village operators in New Zealand.
Michelle Palmer, executive director of the Retirement Villages Association (RVA), says The path to profitability: separating fact from fiction in New Zealand’s retirement village sector report dispels some persistent myths.
“Developing and operating a retirement village is a long-term, capital-intensive undertaking that requires patience, scale and commitment.
“The finding that it can take more than 20 years for an average village to reach payback aligns with our experience.
“Ours is a resident-funded model, where repayments to outgoing residents are generally made possible by incoming residents. There is no large pool of cash -- just a carefully managed system built for the long term.
“This underlines the importance of long-term thinking when shaping the future of this sector.”
The report challenges the misconception that retirement village operators generate outsized profits over short timeframes.
“In reality, the business model is far more complex. Operators must make significant upfront investments, meet ongoing regulatory requirements, manage operational costs, and most importantly, deliver high-quality services and communities for older New Zealanders.”
With New Zealand’s ageing population and growing demand for housing and care options, Palmer says a sustainable and viable sector is essential.
“More than 53,000 older New Zealanders call a retirement village home, and around 130 people choose to move into a village community every week. That’s a strong endorsement of the model and the quality of life it offers.”
The findings also reinforce the need for any reform of the Retirement Villages Act to recognise the sector’s complexity and avoid unintended consequences, says Palmer.
“We’re seeking a balanced and sustainable framework that meets residents’ needs while recognising the realities of operating villages.
“We support the Government’s decision to accelerate changes to the Act, which will bring much-needed certainty and clarity for both residents and operators.
“However, we’re not waiting for the law to change. Around 70 per cent of villages have adopted a range of best practices and we’re committed to lifting the bar across the board.
“This includes re-licensing vacant units as quickly as possible because we know how important timely settlement is for families, and enhancing disclosure around the transition to care, giving residents and families greater clarity.
“Many operators have stopped charging weekly fees once a unit is vacated. The RVA also supports paying interest on outstanding capital sums after a period and clarifying responsibilities for chattels, repairs, and maintenance.”
While most repayments already occur within a reasonable timeframe, mandatory buyback requirements could have significant negative consequences, says Palmer.
“A prescribed repayment period would disproportionately impact smaller regional villages and many independent villages. It could delay new developments -- especially those with hospital-level care -- and drive up costs for residents.
“In a soft housing market like today’s, re-licensing naturally takes longer -- and both operators and residents feel that pressure.
“If investment slows, development slows. And at a time when older New Zealanders need more options -- not fewer -- we can’t afford to lose sight of this.
“Retirement villages remain a popular, trusted choice for older New Zealanders and the sector remains focused on balancing the need to continue to deliver excellent outcomes for residents while ensuring the industry remains financially sustainable.”
The report can be viewed at: http://www.grantthornton.co.nz/insights/the-path-to-profitability/
For more information, please contact:
Sam Halstead
027 474 6065
[email protected]