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Downsizing to upsize lifestyle | Trends in downsizing

lifestyle benefits downsizing
People are now considering the lifestyle benefits of downsizing.

Downsizing is fast becoming a trend throughout Australia as many people are considering the lifestyle benefits of downsizing. Our special guest author is Tina Grey. Tina is a Senior Executive with Jones Lang Lasalle and is one of Australia’s leading ‘thought leaders’ on the changing trends in downsizing.

Tina says….Once upon a time, older generations were reluctant to leave the big family home on the quarter acre block and most people aged in accommodation that became increasingly unsuited to their needs. However, the safety net of our strong superannuation system has given most people more of a choice now and it is clear that people are choosing to maximise their lifestyle and move into more manageable accommodation. 

We are seeing this clearly across the residential portfolio we manage. In total, JLL manages around 4000 apartments across South East Queensland and we get a good view of what is occurring in numerous projects with different mixes of investors and owner-occupiers. In addition, we are proudly managing the region’s first major institutionally owned ‘build to rent’ development, which is the 1251 apartment former Commonwealth Games Village on the Gold Coast, now called Smith Collective.

From our vantage point, it clear that not only is this trend gaining momentum, but it is far from a ‘one size fits all’ sort of trend. That is, there are very different motivations driving downsizers, there is a wide age range of people undertaking it, people are looking for different types of product and indeed it is not all purchasers – more and more people are looking at renting as a downsizing option.

So who is looking to downsize?

We all hear a lot about the ageing populations in most advanced economies. Australia has a younger population than most developed countries because of high migration, but it is still not immune from the ageing trend and demographic bulge of the post-war ‘baby boomer’ generation. Data from the Australian Institute of Health and Welfare (AIHW) indicates that Australia’s proportion of older citizens has been steadily increasing. In 2017, approximately 15% of Australia’s population was aged 65 and over, this translates to around 3.8 million people. This figure has grown from 5% of the population in 1927, 9% in 1977, and is projected to rise to 22% by 2057, and 25% by 2097 respectively.

However, this retiree demographic is only half the story when it comes to downsizing! There is no question that what has really gained momentum in recent years has been pre-retirement downsizers. This group can be classified as the empty nesters looking for a lifestyle change, but undoubtedly in many cases, it has been a move quite deliberately designed to encourage adult children to find their own place!

If we include everyone above 50 (although there is clearly some entering this world before 50) the proportion of the population rises to 31% and is expected to rise to 38% by 2065. For Australia, this translates to around 7.6 million people, with the projected population increase this number is anticipated to rise to over 16 million people nationally by 2065.

In Queensland alone, this demographic segment accounts for over 1.5 million people. While Brisbane has a lower percentage (26.3%) relative to the Gold Coast (31.7%), together these prospective markets form over 500,000 people.

So for property developers, it is potentially an enormous target market. Indeed, our analysis suggests it is one that dwarfs the first homebuyer market that sees around 110,000 transactions per year nationally. In comparison, we expect this target group would be responsible for around four times as many property transactions per year.

So what are the motivations for downsizing?

Again, motivations vary greatly from buyer to buyer, but generally, they are decisions aimed at improving some aspect of lifestyle, be it reducing property maintenance, being closer to lifestyle amenity, or even just freeing up some capital from the family home to enjoy life a bit more (or a combination of all).

One good example in JLL’s management portfolio of a project that really appealed to downsizers is JGL Properties Grange Residences recently completed at the end of 2018. The project included 40 high-end ‘townhomes’ on Kedron Brook at the Grange, that were designed to the national ‘aging in place’ design standards. The project proved very popular and sold quickly. While the product was also pitched at aspirational young professionals, many of the ultimate buyers where downsizers from the surrounding suburbs.

Feedback from these buyers is that they loved the area, their social life and favourite cafes and restaurants were all in the area and it was a very rare opportunity to secure new modern low-maintenance stock in that area. These buyers typically owned large Queenslanders on substantial blocks and were tired of the extensive upkeep.

While these decisions largely reflect lifestyle factors, financial considerations come in too. In many cases, these buyers have made substantial capital gains on their previous properties and have sold for far more than they purchased for. This has allowed many to unlock some of this capital growth to either boost their superannuation or to directly fund the good things in life.

For other buyers, it has not been about retaining their existing suburban life and it has been about embracing a different inner-city urban life. A lot is written about younger generations abandoning the suburban house and land dream and embracing a high-amenity ‘walkable’ urban lifestyle. However, it is clearly not just young people doing this and we’ve definitely seen in our inner-city properties people over 50 looking for the same thing.

And let’s face it, in many cases the financially secure older people can actually embrace the café and restaurant culture much more than cash strapped gen Ys and Millennials!

Inner City apartment development also comes with a lot of other advantages, no matter what age you are. The level of amenity in inner-city development has risen exponentially over recent years. Pools and roof-top entertaining spaces have become common, gyms almost standard, plus we’ve seen many other things emerge like shared dining room spaces, wine storage, ground floor cafes and bars and more tenant services. Yes, a buyer can pay for these features in body corporate fees, but the convenience of these facilities and not having to individually pay or maintain them makes the cost well worthwhile.

It is not all about purchasing, renting to downsize is a thing!

Another perception that is slowly changing in Australia’s housing market is that you have to own a property. More younger and older people are starting to embrace some of the benefits of long-term renting. For younger people, it is undoubtedly a response to affordability pressures and the growing attraction of inner-city living, people are ‘trading space for place’.

For older people, there are other benefits as well. We’ve already discussed the benefits of freeing up capital growth in the family home. Renting allows sellers to free up even more of this capital and put it to work elsewhere to boost their annuity income. Renting also can allow you to push those body corporate fees on to someone else and again reap all the benefits of the amenity and services available.

We believe that the renting option will become even more appealing in future with the development of the emerging build to rent sector in Australia and much more older Australian’s will choose this option over time. The sector basically involves institutional ownership of rental property rather than the traditional Australian model where apartments are owned by individual investors looking to take advantage of tax incentives. This model is very large in many other major developed countries around the world and has many advantages for renters.

Firstly, the properties are designed with renters in mind rather than individual investors. This often means more generous sized apartments, lots of tenant amenity and services. Secondly, properties generally have on-site management and can be much more responsive to maintenance and other requests than going through an individual owner. Thirdly, these facilities can offer the benefits of greater security and community engagement.

Often build to rent properties have a dedicated community engagement function, which can create a much warmer inclusive environment for tenants. Finally, it can offer a little more flexibility in leasing terms. The ability to do a longer lease may be available and also potentially the flexibility to break a lease and enter another for a different property within the same owner’s portfolio of properties.

We are firm believers that this build to rent model will eventually take off in Australia and, like we have

Tina Grey
Tina Grey is a thought leader on the changing trends in downsizing.

seen in other markets globally, empty nesters and retirees will become one of the target markets for operators in the sector.

Nevertheless, regardless of the success or not of this emerging sector, it is clear that downsizing is a trend that is here to stay and something that will increasingly attract more high-quality development targeting this burgeoning demand segment.


Tina Grey is Head of Residential Management – Queensland for global real estate services firm JLL, which has also appointed her General Manager of the $550 million Smith Collective, the country’s first build-to-rent development. In her portfolio, she is responsible for more than 4000 apartments under management across 20 residential sites and has more than 30 people directly reporting to her. With more than 25 years’ industry experience, Tina has worked across all facets of real estate.


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