Planning bottlenecks: Why retirement villages are the new chokepoint in Australia’s seniors living sector

In the intricate web of Australia’s seniors living ecosystem, retirement villages have long been positioned as the vital bridge between independent living and higher-care options like aged care facilities.

Yet, as the 2026 CBRE Seniors Living Report underscores, this sub-sector is increasingly becoming a critical chokepoint, strangled by protracted planning delays and regulatory inconsistencies across states.

For industry insiders, the bed-blocking crisis in hospitals is old news; what’s emerging now is how these bottlenecks in retirement village development are amplifying systemic pressures, potentially leaving tens of thousands of retirees without viable housing options by 2030.

The report paints a stark picture: a forecast shortfall of approximately 49,000 independent living units (ILUs) by the end of the decade. This isn’t a static figure; it is one that’s “consistently evolving”, driven by demographic surges and sluggish supply responses.

Australia’s population aged 65 and over currently stands at 4.75 million, projected to swell to nearly 7 million by 2040. With retirement villages penetrating just 5% of this cohort, the gap is widening at an alarming rate. Approval timelines, often stretching from 365 days in straightforward cases to over 730 days in extremes, are the primary culprits.

These delays stem from fragmented planning frameworks that vary wildly between states, making national-scale advocacy a near-impossible feat.

Consider the operational realities. Retirement villages already endure long development lead times due to their need for specialised amenities, including wellness centres, communal spaces, and integrated care pathways.

When layered with regulatory hurdles, projects grind to a halt. In New South Wales, for instance, updated regulations demand greater transparency in budgeting and long-term maintenance, which, while beneficial for residents, add layers of compliance that smaller operators struggle to navigate.

Victoria’s impending laws, set to commence by May 1, 2026, introduce a mandatory Code of Practice that further emphasises safeguards but could inadvertently slow approvals if not implemented smoothly.

Queensland, with its financial reporting changes already in effect, serves as a model for other states, yet even here, operators report bottlenecks in securing development applications (DAs). The report notes that planning approvals are taking “anywhere from 365 days to over 730 days in extreme cases”, a timeframe that deters investment and exacerbates undersupply.

This isn’t mere bureaucracy; it is a structural impediment that threatens the entire seniors living continuum. As the report warns, failures in retirement village supply will cascade into aged care, where facilities are already operating at 96% occupancy and facing their own construction cost inflations of $450,000 to $500,000 per bed.

What’s particularly galling for sector experts is the missed opportunity for synergy. Retirement villages aren’t just housing; they’re health enablers. Data from the report reveals that residents in these communities are twice as likely to report happiness, 67% more engaged in social activities, and 41% more likely to see family and friends regularly.

Health outcomes are equally compelling, with 23% fewer admissions to GPs, hospitals, or aged care, and a staggering 2.6 times more participation in communal meals. Living in a retirement village results in a “healthier ageing process”, reducing strain on public healthcare systems. Yet, with planning delays, these benefits remain out of reach for many.

Operators are adapting, but innovation has its limits. The rise of vertical villages, accounting for 70% of new developments under construction, reflects a strategic pivot to urban infill sites where land scarcity is acute. Examples abound, including Ardency Kennedy Place in Sydney, AVEO Carindale in Brisbane, and Australian Unity’s The Alba in Melbourne.

These multi-level designs integrate retirement living with metropolitan conveniences, appealing to a discerning demographic that values proximity to services. The Grace at Albert Park and Campbell Place at Glen Waverley further illustrate this trend, blending premium amenities with dementia-friendly features.

However, even these adaptations can’t fully offset the planning quagmire. The report highlights that new supply is likely capped at 2,000 to 2,500 units per annum, far short of demand. Occupancy rates have climbed steadily above 94%, but this masks underlying vulnerabilities.

Resident tenure averages seven to nine years, with over half eventually transitioning to aged care, yet units can sit vacant for six months between occupants due to resale processes. In a market where 70% of over-65s own their homes outright, with average values at $960,000, affordability isn’t the barrier; availability is.

Expert commentary in the report amplifies these concerns. Mark Prosser from Ageing Australia describes the past year as “one of the most dynamic periods” in the sector’s evolution, with reforms aiming for better harmonisation across states.

Yet, he cautions that state-based nuances persist, complicating multi-jurisdictional operations. Prosser advocates for recognising retirement living as a “formal and essential component” of the ageing system, urging governments to streamline approvals to unlock its potential.

From an investment lens, these bottlenecks are a double-edged sword. Institutional capital is flowing in, attracted by stable demand and demographic tailwinds. Superannuation balances for 60 to 64-year-olds average $500,000 for males and $400,000 for females, providing ample equity for entry.

Median ingoing contributions for two-bedroom ILUs sit at $512,000 nationally, representing just 53% of surrounding suburb house prices, making villages an attractive downsizing option. Three-bedroom units are at 66%, still a bargain in high-cost areas like NSW, at 64% lower than the median, and QLD, at 53% lower.

Deferred Management Fees (DMFs) add another layer. Nationally, the most common structure is spread over five years at a 32.7% average, with 30% of new residents opting for capital gain sharing. In the ACT, this rises to 67%, offering operators revenue stability while giving residents upside potential. Yet, planning delays erode these financial incentives by inflating holding costs and opportunity losses.

Looking ahead, the report calls for urgent policy intervention. Ageing Australia’s Continuum of Ageing 2050 project envisions deeper integration, with villages evolving into service hubs featuring home care, allied health, and tech-enabled monitoring. To realise this, planning frameworks must be reformed, perhaps through federal oversight to standardise approvals and reduce lead times.

For providers like Keyton, Levande, and Eureka, the message is clear: navigate hurdles by focusing on scale and innovation. Larger operators are better positioned for acquisitions and repositioning, as seen in Southern Cross Care’s plans for consolidation. But without systemic change, the chokepoint tightens.