Pet Ownership Meets Real Estate: Exploring ‘Pawsitive Returns’!

The global pet boarding industry encompasses a wide array of services designed to care for pets, primarily dogs and cats, in the absence of their owners. This sector includes services such as overnight boarding, daycare, grooming, training, and even pet transportation. Over the past decade, the pet boarding industry has evolved from a simple kennel service to a multi-faceted industry offering a variety of premium services aimed at providing comfort, security, and entertainment for pets.

In response to the shift in demand for pet care services, institutional real estate investors are taking a closer look at this sector, which has historically remained highly fragmented but is now being consolidated into professionalised, multi-asset platforms.

The rising trend of pet ownership, particularly in urban areas, has spurred the growth of the pet boarding industry. With an increasing number of people viewing their pets as part of the family, the demand for high-quality pet care services has surged. This industry has also been influenced by the growing awareness of animal welfare and the desire for convenience among pet owners who seek reliable and trustworthy boarding options.

Pet boarding services have become a crucial part of the pet care ecosystem, providing solutions for pet owners who travel frequently or have demanding work schedules. These services ensure that pets receive the necessary care, exercise, and social interaction while their owners are away, thus preventing issues related to isolation, stress, and inactivity.

The importance of pet boarding extends beyond mere convenience. As pet owners become more concerned with the well-being and happiness of their pets, the industry has responded by offering a range of services that cater to these needs. This includes personalised care plans, luxury accommodations, and even pet spa treatments. The emphasis on quality and the ability to customise services have become key differentiators in a competitive market.

The pet resort sector remains highly fragmented, with 98% of the market in Australia, US and Europe in the hands of private operators. The big opportunity for real estate investors in this sector is to consolidate and streamline operations across multiple facilities. Improving their profitability, operational performance and quality of accommodation at scale. Given the high barriers to entry into this sector from a licensing point of view, it is our view that the roll of up existing facilities, in deep, established markets where outsized property returns of over 20% can be found.

The outlook for the sector points to continued demand growth over the next decade, with the industry growing at a compound growth rate of 7% globally. However, there will be significant regional divergence, with the Asia Pacific generating the lion’s share of this growth, as household wealth and pet ownership levels rise faster than in Europe and North America. We are forecasting the Asia Pacific to become the dominant pet accommodation market by 2040. Closer to home, the Australian pet resort market is anticipated to double in annual revenue by 2030 from A$681 million to A$1.25 Bn by 2030. Australia will have one of the largest, most sophisticated and professionally managed pet accommodation offerings outside of the USA and Western Europe, making the sector a key target for domestic and international investors.

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