* Brookfield bid 9.5 pct over Hometown America's
* Gateway grants due diligence
* Shares jump to 1-yr high
* Retirement sector seen as bet on Australia's ageing population (Recasts and adds shares, analyst and company comments, background)
By Tom Westbrook
SYDNEY, June 21 (Reuters) - Canada's Brookfield Asset Management Inc launched a $515 million bid for Australian retirement village owner Gateway Lifestyle Group on Thursday, topping an earlier bid from Hometown America Corp and setting up a takeover tussle.
The North American pair are jostling for exposure to Australia's wealthy and ageing population, as well as a real estate market that has until recently run strongly. Gateway shares hit their highest in a year in anticipation of a battle.
The suitors swooped just weeks after a wobble in property prices prompted a profit warning from Gateway and pushed its shares to their lowest since listing three years ago. Only Brookfield was granted due diligence.
"The stock has been on a steady decline ... it is opportunistic," said Mathan Somasundaram, market portfolio strategist at stockbrocker Blue Ocean Equities.
"Where's the value for the bidder? It's probably about merging it with others - someone buying pieces to put together."
Gateway operates 50 villages, often former caravan parks converted into communities for residents over 50 years old. Most of them are in small towns on Australia's populous east coast.
The offer from Brookfield, at A$2.30 per share, values Gateway at A$698.6 million ($515 million). Chicago-based U.S retirement community operator Hometown America offered A$2.10 a week ago.
"The Brookfield proposal is superior to the ... proposal received from Hometown," Gateway said in a statement, adding it would allow the Canadians due diligence.
A Brookfield spokeswoman declined to comment and Hometown America could not be reached for comment after hours in Chicago.
Investing in the retirement sector is viewed by analysts as a means to profit from Australia's ageing population and tap generous government subsidies offered to pensioners.
Gateway's shares debuted at A$2 in 2015 and ran hard, along with aged-care companies such as Estia Health Ltd, Japara Healthcare Ltd and Regis Healthcare Ltd , touching above A$3 that year and in 2016.
But the sector has weathered a number of scandals involving poor care and questionable fees, and is now facing tougher regulatory scrutiny. At the same time, property prices have started to soften, eroding the value of Gateway's principal assets as well as the savings of its customers.
The stock had shed 40 percent between late 2016 and May, when Australian home prices fell for the eighth strait month and Gateway cut its guidance because incoming residents were finding it harder to sell their old houses.
On Thursday the Gateway's share price jumped 6.3 percent to A$2.28 while the broader market rose 1.1 percent.
$1 = 1.3580 Australian dollars Reporting by Tom Westbrook. Additional reporting by Rushil Dutta in Bengaluru; Editing by Stephen Coates