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Financial `metrics for comparing Australian retirement villages

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  • Timothy Kyng
  • David Pitt
  • Sachi Purcal
  • Jinhui Zhang

Abstract

Retirement village contracts are complex, blending together financial options on real estate, life annuities and life insurance. We analyse the structure of the cash flows involved in a retirement village contract and distil the cost components into an equivalent monthly comparison rent. In general, we observe lower monthly rents when the maintenance fees and deferred management fees are lower, when higher rates of capital gain are evident, and, importantly, when retirees reside in the retirement village for a longer period. Our analysis provides a framework to meaningfully compare the relative merits of the finances incorporated into retirement village contracts.

Suggested Citation

  • Timothy Kyng & David Pitt & Sachi Purcal & Jinhui Zhang, 2021. "Financial `metrics for comparing Australian retirement villages," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(4), pages 5581-5611, December.
    • Handle: RePEc:bla:acctfi:v:61:y:2021:i:4:p:5581-5611
    DOI: 10.1111/acfi.12768
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