“While the concept of Manufactured Housing Estates (MHEs) is still in its infancy and undergoing an evolutionary phase in Australia, it is firmly on the rise.” says Trudy Crooks, national sales manager at Resort Brokers Australia.
In recent years, MHProNews has been following the development of the manufactured housing industry in Australia – including the land-lease community sector.
Here in the United States, the HUD Code manufactured home industry has been struggling with a variety of issues.
But in the ‘land down under,’ they have an opportunity – as does Hawaii – to get a fresh start.
That re-imagined beginning could be free of much of the baggage that has – rightly or wrongly – dogged manufactured homes and communities in America.
This year may mark a turning point in the growth of their branch of the industry.
Demand for Retirement Housing
“Some forecasts say retirement-led demand for MHE dwellings could surge to 50,000 extra units in the next decade,” Crooks said.
The Australian Institute of Health and Welfare reportedly projects that by 2056, some 22 percent of the population – or around 8.7 million people – will be age 65 and older.
Retirees are one of the driving forces behind the need for more affordable housing opportunities, Crooks told The Urban Developer. That will play a big part in the growth of what they call “manufactured housing estates” or MHEs in their country.
“MHEs actually operate in the same regulatory environment as the caravan park industry out of which they grew,” Crooks explained.
MHEs in Australia are taxed differently than regular property, or even retirement villages.
“Residents of MHEs – or ‘land lease communities’, as they should be more properly called – own their own factory-made homes, and pay a ground rent to the estate operator,” said Crooks. “If a manufactured home owner chooses to leave the community, they can generally just sell their house to an incoming purchaser, who then takes on the land rental.”
In a previous Daily Business News story we reported on a five-year agreement that would allow Fleetwood Corp. to install manufactured homes in a total of nine different National Lifestyle Villages (NLV) communities.
At the time, they were still waiting for approval for three more communities – all of which would have been aimed at retirees. These are potent indicators of the growing potential of the market there.
They are also suggestive of what might be possible in the U.S. or Canada, if the industry takes the necessary steps to correct outdated or false perceptions.
More Bang for the Bucks
“In addition to lifestyle manufactured home estates for retirement living, we believe manufactured accommodation could become a cheaper alternative to traditional construction,” said Sandon Capital Investments, activist, and investor in Fleetwood.
Looking into the future – and noting the need for affordable housing for more than just retirees – Crooks believes manufactured homes will become a popular option among younger adults as well.
With the increasing popularity in manufactured housing estates and the growing knowledge of how well built and designed they are, this is a prime opportunity, says Crooks, for those looking to invest in the industry while it is still in its relative infancy in Australia.
“Development is low-risk and capital light, with attractive returns and CPI-indexed cash rents. Sites, often in prime coastal locations and on the outskirts of metropolitan centres, represent land banks with cashflow,” Crooks states.
“Up until now, MHE developers and operators have targeted existing caravan park sites because appropriate zoning is already in place,” says Crooks.
In prior Daily Business News reports, manufactured home builders have been obtaining agreements with existing sites, as Crooks said.
However, there have also been stories like that of DOYALSON-Wyee RSL Club, who in 2016 announced their plans to develop a 139-site manufactured home community.
“We can certainly see potential for growth of MHEs as affordable permanent housing solutions for a younger demographic,” Crooks said.
Her comment dovetails with reports that millennials and others might embrace manufactured homes here in the U.S. and Canada, so long as they weren’t caught up in the ‘trailer’ image.
“Furthermore, any perception of MHEs as a low socio-economic option is rapidly changing as the new estates become more lifestyle focused, with higher quality factory-built homes that resemble bricks and mortar houses,” she said.
That too dovetails with reports from California and elsewhere, where upwardly mobile (pun intended) and frugal millionaires who have taken the time to understand manufactured homes and land-lease communities, are embracing the appealing lifestyle.
In Australia, developers and investors are working to capitalize on the booming need for affordable homes, while fighting the stigma seen all-too-often in the U.S. and Canada. They are doing so by providing MHE communities that have luxury amenities such as pools, club houses and more, as well as by providing an unmatched quality for the dollar found in modern manufactured homes.
While some forward thinkers and MHC REITs in the U.S. and up north have done similarly, most to date have not. ## (News, analysis.)
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