Summerset is nudging closer to expansion across the Tasman with the opening of its first Australian office.
“We have established an office in Melbourne with a dedicated team headed up by Paul Morris, our former GM Development, who is now GM Development Australia,” confirms Summerset chief executive Julian Cook.
However, Cook could not be drawn on when we’re likely to see the first Australian Summerset village built or whether Summerset intends to focus its development in Victoria, like competitor Ryman Healthcare, or in other regions.
“We have been working through assessing this market and how we would position ourselves and operate within it,” says Cook. “We continue to work through the appropriate due diligence required before entering a new market.”
No doubt Summerset has been watching with interest as Ryman makes inroads in the Australian market.
Ryman’s expansion in Victoria hasn’t been entirely smooth sailing with its proposed village at Mt Eliza, receiving criticism this week from local MP David Morris in The Mornington Peninsula News. Morris says the village would be a “gross overdevelopment of the site” and claims it would convert what is currently an urban break into a suburban precinct.
However, despite such skirmishes, Ryman’s expansion into the Australian market has been successful, thanks to the growing demand for retirement living options and care facilities. Experts suggest there is room for new entrants as the continuum of care model that is proving so popular in New Zealand is not yet widely available in Australia.
One such expert is First NZ Capital analyst Arie Dekker who last year raised the suggestion that a merger between Summerset and Metlifecare would put the two companies in a better position to expand into Australia. He suggested Metlifecare’s strong balance sheet and operating cash flows would complement Summerset’s good land bank and more advanced development capability. However, neither company appears to be considering this.
Metlifecare says it remains focussed on its development in New Zealand for now – although it hasn’t ruled out expansion overseas in the future.
“We see the same growth opportunities in Australia as our peers and are open to those in the future,” says Metlifecare chief executive Glen Sowry. “In the short term, our focus is on successfully delivering on our growth programme in New Zealand which will create the platform for us to look at offshore opportunities.”
Sowry sees strong growth opportunities continuing for Metlifecare domestically. He says the company is making “excellent progress” against their stated target of 300 units and beds delivered annually by 2020.