A market-oriented model for the independent-living retirement village industry

Abstract

PurposeAs the “baby boomer” generation continues to enter their senior post-retirement years, the provision of affordable retirement housing has become increasingly important for the community, practitioners and policymakers. However, relatively little attention has to date been placed on identifying an effective market mechanism for the industry of the independent-living retirement villages to meet this increased and unprecedented demand. This study aims to develop an innovative and affordable retirement village development model which meets the needs of all stakeholders including seniors, retirement village residents, the retirement village industry and government.Design/methodology/approachThe attributes of this study are as follows: structure of individual living units, retirement village characteristics, retirement village facilities and services and support mechanisms. The analysis was undertaken based on data relating to independent-living retirement villages in five Australian states. A hedonic pricing model was used where the price distributions relating to these four aspects were estimated.FindingsThe results confirmed the structures of the independent living units and the retirement village characteristics were closely related to pricing, followed by services and supports with a lesser relationship, although the facilities were not significantly related to pricing.Research limitations/implicationsThis research is not able to address the entire retirement village market in Australia because the available market data are limited.Practical implicationsThis research uses an innovative supply-side approach to assess retirement village attributes and values, which provides stakeholders with up-to-date market information to assist in guiding the performance of the retirement village industry.Social implicationsThe market evaluations imply that seniors are reluctant to pay for village attributes that are not regarded as highly sought-after. A cost-effective strategy of new retirement village developments and upgrades can be further induced, which in turn can enhance the market efficiency and affordability of the retirement villages.Originality/valueThis pricing model for retirement village units extends previous studies into retirement villages and presents stakeholders with an innovative and reliable market-oriented model.