The race to secure residential aged care beds in Australia is hitting a critical bottleneck. Demand for modern, high-quality care places is growing, while construction costs and capital constraints are making new developments harder to deliver.
Against this backdrop, Vasey RSL Care’s acquisition of the St John of God Rehabilitation Hospital in Frankston, Victoria, brings forward a solution that could see providers meeting demand sooner by adapting existing – suitable – buildings.
Vasey RSL Care primarily supports veterans and their broader community, and will take ownership in November 2026, with planning and refurbishment works to follow in 2027.
According to council projections quoted by Vasey RSL Care, people aged 60 and over will account for 24 per cent of Frankston’s population by the end of 2026, compared with 21 per cent across Greater Melbourne. Neighbouring Mornington Peninsula Shire also has the highest number of veterans of any Victorian local government area.
For Vasey RSL Care Chief Executive Officer Janna Voloshin, the investment is about helping people remain connected to their community.
Voloshin wants to ensure “more people can access quality care close to their family, friends and support networks.”
Speed is another consideration. Voloshin described refurbishment as “substantially quicker” than starting with vacant land and progressing through planning and construction.
The viability of investment in existing buildings
Beyond its immediate local benefit, the Frankston project puts adaptive reuse back in focus to help address the shortage of residential care places.
National figures show that upgrading existing aged care facilities already attracts substantial investment, although this is distinct from converting buildings from another use.
The Australian Government’s Financial Report on the Australian Aged Care Sector 2024–25 recorded $1.1 billion in expenditure on completed or in-progress upgrades, up 14.9 per cent on the previous year. Over the same period, spending on new buildings fell 4.9 per cent to $2.5 billion, while rebuild spending declined 16.7 per cent to $547.9 million.
These numbers only give part of the picture. Just 26.4 per cent of residential providers answered at least one building and capital investment question, and reported expenditure does not establish or translate to how many additional beds were delivered.
Building approvals also increased from 232 to 285, indicating continued development activity despite lower reported spending on new buildings and rebuilds. The data therefore provides context for investment decisions, rather than evidence of a sector-wide shift towards adaptive reuse.
From corporate headquarters to residential care
Australian Unity’s The Alba demonstrates that buildings outside the healthcare sector can also be adapted for aged care.
Opened in 2023, the 15-storey development transformed the organisation’s former South Melbourne office headquarters into residential aged care and assisted living accommodation.
According to Australian Unity, the delivered project cost $6,300 per square metre, compared with an estimated $6,700 per square metre to demolish and rebuild. These figures, supplied by project quantity surveyor WT Partnership, put adaptive reuse approximately six per cent below the modelled rebuild cost. Retaining the building also saved an estimated 3.4 million kilograms of carbon compared with constructing a similar building from scratch.
Construction took 28 months, including pandemic delays, with practical completion in June 2023 and operations commencing that August.
The Alba delivered 117 new residential aged care beds across two stages, including the subsequent conversion of some assisted living accommodation to meet demand. Australian Unity reports occupancy of 96.5 per cent in its residential aged care component.
A building must work as a home
The opportunity of adaptive reuse comes with a very real design challenge in that an existing structure must support the people who will live and work there in its future iteration.
HSPC Health Architects identifies potential delivery and cost advantages from adaptive reuse, however constraints include outdated building services, inflexible structures, accessibility and fire safety requirements. Its published commentary stresses that glossy finishes cannot compensate for improperly planning for functional use.
For aged care, that assessment must also consider a resident’s everyday life. Victorian Health Building Authority guidance describes contemporary aged care residential homes should be organised in smaller households, offering private bedrooms and ensuites, shared domestic spaces and accessible outdoor areas. These provide a useful benchmark when assessing conversion opportunities.
A hospital or office building may offer a useful starting point, but its suitability depends on whether it can accommodate a welcoming home, effective care delivery and residents’ changing needs.
Different pathways to more accommodation
Adaptive reuse is not a magic bullet, and it requires providers to navigate clear compromises. Converting a rigid, clinical hospital layout or a corporate office grid into a warm, hospitality-driven, home-like environment requires significant architectural ingenuity.
Yet, as new build timelines stretch into years, adaptive reuse may offer a faster route to opening new care places. By using obsolete health assets, providers can bypass land scarcity, streamline localised planning permits, and position beds directly inside the communities that need them most.
For Vasey RSL Care, the hospital acquisition and conversion supports accommodation continuity during a larger, separate Frankston South redevelopment, helping the wider community navigate generational change.
