[+] Developers Sweat Assets in Wellness Boom

“What is bathing when you think about it—oil, sweat, filth, greasy water, everything loathsome.” Clearly, times have changed since that observation by Roman emperor Marcus Aurelius in the days when all roads really did lead to Rome and the city’s almost 900 public baths were as much a part of life as they were places to wash. Ancient Rome's urban oases were mixed-use community hubs featuring thermal baths and other water-based therapies, fitness centres, restaurants, bars and even live venues where musicians and philosophers entertained. Fast forward several centuries and the history of urban planning and social infrastructure is repeating itself—minus the “filth and greasy water” and with more than a few technological advances. But until a decade or so ago, wellness was still not even considered an industry. Growth of an industry Now, according to the latest data, the global wellness economy is on track to reach $US8.5 trillion by 2027, an increase of 52 per cent from $US5.6 trillion in 2022 and with a forecast average annual growth of 8.6 per cent. Significantly, according to the US-based Global Wellness Institute (GWI), the biggest projected wellness growth leader is wellness real estate with expected annual growth of 17.4 per cent followed by wellness tourism (16.6 per cent). ▲ Wellness was not considered an industry a decade ago, and now it has become a buzzword in the property world. In the institute's Global Wellness Economy Monitor 2023 published in November, the data shows the global wellness real estate market has undergone massive growth of about 77 per cent—from $US225 billion to $US398 billion—in the three-year period to 2022. And it predicts the sector will “explode” to become an $887.5-billion market by 2027. “Wellness real estate has been the fastest-growing sector in the wellness economy since before the pandemic, significantly outpacing projections and economic growth trends,” the report says. “Covid-19 has accelerated the growing understanding among consumers and the building industry about the critical role that external environments play in our physical and mental health and wellbeing.” By the institute's calculations, Australia is now ranked as the world's fourth biggest wellness real estate market ($22.52bn) behind the US ($US176.08bn), China ($US63.37bn) and the UK ($US23.37bn). Developers flex into wellness space The impact of the massive growth of the wellness industry on the property sector and its potential opportunities has not been lost on Brisbane-based developer Damien Cavallucci. “Phenomenal, isn’t it,” the founder and managing director of Cavcorp says. “It’s really changing things. You can no longer have one without the other—they go hand in hand.” Cavcorp is the developer behind what is touted to be the largest wellness centre in the southern hemisphere. Spanning 9100sq m across six levels, the $80-million standalone Total Fusion Platinum gym and health club within inner-city Brisbane’s Gasworks precinct at Newstead sits adjacent to Cavcorp’s Luminaire and Lucent residential towers. “To have a backyard now is pure luxury and, basically, we’re giving our residents an opportunity to have a backyard,” Cavallucci says. Fair to say, however, it is probably not quite the type of backyard many people remember running around. ▲ The new Total Fusion Platinum at Newstead is being touted as the biggest wellness offering in the southern hemisphere. Aside from its two levels of high-tech gym equipment, it also features a snowroom with a swing, salt room where the air is infused with Himalayan rock salt, medical-grade hyperbaric recovery chamber, saunas, hot/cold plunge pools, digital rock-climbing wall, pilates studios, high altitude training room, lap pool as well as a rooftop magnesium pool with a bar serving cocktails and meals made with ingredients from the building’s organic garden complete with beehives and a chook house. “People want to do more than just live in an apartment, they want to have amenity … they want to live within close proximity to a wellness centre and a Woolies. They are the two main things,” Cavallucci says. He says the wellness centre was inspired by a hotel with “amazing wellness facilities” he stayed in during a trip to northern Italy’s Lake Como. “That, for me, was what changed the way I look at apartment living.” But even Cavallucci concedes his sizeable 21st Century version of an ancient Roman bathhouse is just the tip of the iceberg of the wellness real estate revolution and much bigger things are yet to come. In other countries, stadium-sized “wellness playgrounds” are already emerging as the urban planning strategies of major cities shift focus to the provision of more accessible and affordable community-based wellness facilities. Stadium-sized wellness playgrounds on the horizon Some of these large-scale facilities are the size of New York’s Museum of Modern Art and Yankee Stadium … “the size of infrastructure”, US-based urban wellness expert Robert Hammond says. Hammond was a key figure in the push for the adaptive re-use of The Highline—a historic freight rail line elevated above the streets on Manhattan's West Side—as a landmark public park. It attracts five million visitors a year and is estimated to have generated about $2.2 billion in new economic activity and increased tax revenues, through higher property values, by $980 million. Hammond now heads up the North American arm of Austrian-based Therme Group, a global wellness resort developer with a multibillion-dollar pipeline across Europe, the UK, Asia, the US and Canada. Its projects range from 45,000 to 70,000sq m landscaped glass structures with thermal pools, saunas, water parks and other wellness amenities that are designed to attract up to 10,000 people a day. “What interested me about the concept was the size,” Hammond says on a podcast for the Global Wellness Summit. “It’s very profitable because of the scale but the scale necessitates it being accessible.” ▲ Wellness resorts the size of stadiums are proving to be big business abroad, pictured is a render of Therme Canada's Ontario Place Spa. Sydney-based Amara by Design led by Kara Simone Kennedy is a developer at the other end of the wellness real estate spectrum. It has filed plans for a contemporary high-end block of four, four-storey townhouses on a 551sq m site at Palm Beach on the Gold Coast. Kennedy says the proposed development’s wellness focus was a holistic approach looking at the site’s location, design, construction methodology and materials. Its design incorporates water filtration and air purification systems, a lighting plan which supports the circadian and psychological health as well as spaces that encourage mindfulness, she says. “The magnesium pools and those sorts of wellness amenities are great but I think there's a lot more that developers can do to create healthy living environments. “I went through a whole heap of health issues, which I found out were connected to properties that I was living in that had mould issues and high levels of electromagnetic radiation. “So through my own personal experience, it's made me understand the importance of and social responsibility I have as a developer to create living spaces that are going to enhance people’s wellness not put it at risk.” According to Cavallucci, however, the escalation in construction costs has made the incorporation of wellness features and amenities cost prohibitive in many developments. “There's just no way you can make it work at the moment,” he says. “To replicate what we've done would be very tricky, almost impossible. “Because the costs of construction are going so high, a lot of developments are getting stripped right back and so wellness features are getting extremely difficult to put into a project. “If it costs you say $1 million to build an apartment about $200,000 of that will be for the amenity. “It’s not cheap and you’re losing saleable area … so if people want everything they have to understand it will come at a price.” But Kennedy adds: “As a community, I think because people are just not feeling well and are getting sicker and sicker, they are now realising that they need to invest in their health—not just physical health but mental health, too”. The research in the GWI's latest report concurs. “The wellness economy will only expand its share of consumer spending and the global economy over the next five years,” its says. “Wellness has become a dominant consumer value worldwide. “While the Covid-19 pandemic has disrupted the momentum of the wellness economy in the short term, it has simultaneously created a major shift in the long-term opportunities and trajectory for wellness.” According to GWI senior research fellow, Ophelia Yeung, the global wellness economy has “a strong current under its wings” based on global trends that are only accelerating, including an ageing population, rising chronic diseases and mental unwellness and the shift in consumer values. “But it is also facing some challenging macro conditions like widening wealth gaps, consumer confidence in uncertain economic conditions, and rapidly changing geopolitics that will affect the flow of people, capital, technology and ideas,” she says. “How the wellness economy will do will depend on the interplay of all of these factors.” You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. 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[+] Developers Sweat Assets in Wellness Boom

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