Australian seniors face 50-year housing supply gap

“It’s been a problem forever, and it’s not like it’s been addressed,” says Marcello Caspani-Muto, CBRE director, Australian healthcare and social infrastructure.

“We’re about 40 to 50 years behind what’s needed supply-wise. So … it’s pretty undeniable: If you’re looking to invest in the category, seniors living is where you want to invest.”

The federal government’s Intergenerational Report released last week warns of the implications of an aging population and declining fertility rates.

The 85-plus cohort is expected to triple by 2065-66, which the report’s authors say will shift Australia’s industrial base towards service provision.

Transactions rising, but more capital needed

CBRE research shows senior-living transaction volumes grew strongly since 2021 to account for $3 billion annually – representing between 5 and 10 per cent of all Australian commercial real estate deals.

Caspani-Muto says the sector is attracting growing participation from private equity and institutional capital, but the return on investment isn’t always attractive.

“The build costs or refurbishment costs are not really something that private capital has been able to get into because the returns aren’t there,” he says.

“So this is part of the reason we’ve got problems, because we need more institutional and private capital to help build the supply pipeline, and right now, institutional-wise, there are really only one or two operators or funds that do this.”

Refurb more likely to create returns

The path to greater returns is more reliable through refurbishing older assets, Caspani-Muto says.

“The best way, but this is very hard to find, is you buy an older aged care home that’s vacant, for example, you renovate it and expand it, and then that can be more viable,” he says.

“That’s kind of the only way to make it work if you’re a private investor or an institution today without doing a more complex new-build structure.

“So someone might pick up a 30, 40 or 50-year-old vacant aged care building and they might spend 15 million dollars on it.”

A former women’s-only rehabilitation and mental health centre in the Wollongong suburb of Thirroul has just changed hands for about $19 million. The buyer is a private aged care provider with three operational homes.

Consolidation opportunities for fragmented sector

CBRE data shows the senior living sector is highly dispersed, with the top five operators accounting for just 17 per cent of retirement villages and about 20 per cent of aged care.

Land-lease communities are the outlier, with a high concentration at 55 per cent of developed stock.

For many investors, it presents a good case for consolidation.

“What we’re seeing is a lot of the mid to larger-level operators having a strong appetite for [mergers and acquisitions] because they realise, even the ones with the big balance sheets, that they can’t build seven aged care homes a year,” Caspani-Muto says. “If you think about the cost, that could be $400 to $5000 million off a balance sheet.

“They’re the ones that are building, and they’re really important, but they can’t build a huge volume; they can do a few a year, and they have to spread their pipelines out.”

Construction confidence falling in retirement living

The latest Procore/Property Council Industry Sentiment Survey shows construction expectations for retirement living have dropped for a third consecutive quarter, down to 35.55 per cent in September 2026 from 48.23 per cent in December 2025.

It’s the weakest result in two years, says Daniel Gannon, Retirement Living Council executive director. 

“Australia is on a collision course as enormous future demand runs headlong into a slowing development pipeline,” Gannon says. 

“Demand is rising fast, but confidence in building the homes older Australians need is starting to move the wrong way.

“We can’t spend the next 40 years watching the ageing population grow while making the homes they need harder and more expensive to build.