Working Out The Retirement Industry

In the long term, New Zealand is facing an increase in population numbers and proportions at the older ages, specifically for those 65+ years. Statistics New Zealand National Population Projections reflect a 90% probability that people aged 65+ years will make up between 21-26% of the approximated 6million strong population in the year 2043… or roughly 1.32 million people, 240,000 – 280,000 of whom will be aged 85 years and up.

In addition to this, nationwide research conducted independently by Metlifecare in November 2016, indicates that more than 68% of Kiwis over 45 years old would consider moving to a retirement village at some stage in their life.

So following what Metlifecare has reported, and through hashing out some novice math, we can reasonably infer that when today’s 45-year-olds have their 70th birthday in 2043 (and if they haven’t changed their mind), and provided that a similar approval rating will hold true for those close to them in age, we can expect to see demand for retirement villages from approximately 68% of the aged population of 1.37million – or roughly 931,600 people.*

Now obviously my coffee-table calculations are neither precise nor sensitive to the multitude of environmental factors that could affect such demand, and in no way do I claim to be qualified or experienced in the mapping or projections of socio-economic population trends.

A more professional opinion than mine could be found in the New Zealand Retirement Village Database (NZRVD) Whitepaper that is published annually by Jones Lang Lasalle (JLL).

In their 2015 report (at the time of writing this I could not find a newer edition), JLL had based their figures on a population aged 75+ years in 2043 totalling 778,990 and a ‘best case scenario’ market penetration rate of 16%, equalling a much-more-conservative but still-the-size-of-a-small-city 124,638 residents.

picjll

Even with the massive drop in perceived demand from 68% to 16%**, JLL has forecast that the construction industry will need to provide an average of somewhere between 11 to 15 new villages per annum – or 2270 new units -between 2018 to 2043 to keep up with the increase in projected demand.

And that’s actually quite a lot.

This ageing baby-boomer phenomenon is not unique to New Zealand by any measure and is currently being anticipated and discussed by economists, statisticians and sociologists throughout the developed world.

However, reasons given for the upswing in popularity of Retirement Villages in comparison to previous cultural norms appear to be a combination of three factors. Firstly, an increased geographic scattering of modern families which has separated the elderly from their adult children, who would otherwise house them; secondly, a sustained increase in the amount of females in the workforce who are not available throughout the day to look after grandparents; and finally an overall increase in health and longevity of developed national populations.

Regardless: there is a huge and ongoing demand for construction professionals within the Retirement Village industry – and it’s likely to stay that way for at least another 27 years.

So if you’re a building design or construction professional, and interested in anything you’ve read above – tell me about it.
Opportunities are everywhere… (but especially here).

*This was an outrageous sum, please don’t take me too seriously.
**still joking.

Facing a Candidate Shortage in an Industry Boom

This won’t come as a revelation; New Zealand’s construction industry is facing a striking candidate supply-demand crisis. Yes, there is a shortage of skilled staff employers face when looking for hiring new talent to expand their businesses.

As a nation, we’re currently in the middle of the largest construction boom in 40 years, described as ‘unprecedented’ and tipped to last for at least the next 6 years[1].

As the Christchurch rebuild starts to wind down, the flow back has resulted in increased residential demand throughout the country, particularly in Auckland, Wellington and the Waikato. The 2016 Budget has included approx. $358m for construction; namely social housing. Similarly, other commercial and civil work, such as clusters of multi-million-dollar retirement village developments, are well underway throughout our major cities in anticipation for the aging ‘baby boomer’ population.

All of this growth and development activity should provide the perfect opportunity for our construction industry to flourish and grow, but a shortage of staff – and in particular, a shortage of apprenticeships – has created “cut-throat” competition for talent.

But why is this the case when the BCITO lists their largest career-seeking audience as the 406,000 kiwi ‘millennials’[2], with 186,000 of them actively considering their career options right now?

Recognising this abundance of potential talent, the NZ Government has committed $28.6m towards attracting and training more apprentices for trades over the next four years. There is also a particular focus on developing our female workforce who are largely under-represented within the construction industry[3].

Although these studies are directly relating to carpentry and other blue-collar trade apprenticeships, I would personally like to see more females entering Quantity Surveying, Site Management and Commercial Project Management cadetships.

Time will tell whether the Governments directed focus results in a tangible increase in these areas to provide us with a skilled workforce, that will enable our industry can continue to grow from strength-to-strength.

However for now, I think we can be sure of three things;

  1. Employers can continue to expect fierce competition to attract and retain the best talent within a scarce market; and
  2. Employees with the most sought-after skills and capabilities can expect more interest during their job searching experience and potentially, as well as more opportunity to advance their careers and skillset.
  3. On-the-job training programs and public-private initiatives will help ‘close the gap’, but other recruiting and staffing solutions will be increasingly necessary.

[1] http://www.buildersbase.co.nz/#!NZ-Construction-Boom-Tipped-for-next-Six-Years/c1kod/55c126260cf265ef515e7a54

[2] BCITO Annual Report 2015

[3] http://www.newshub.co.nz/politics/budget-funding-for-trades-training-2016051915#axzz49cVwdC00