Retirement property: A growing market

South Africans aged 60 and over comprise 8.1% of SA’s 55.5m population, according to Statistics South Africa. And courtesy of the almost 10-year increase in the lifespan of the average South African, they are living longer.  

SA’s elderly are an increasing percentage of the population, the over 60s group growing at a compound annual growth rate of 2.7%.  

“The percentage of South Africans over the age of 60 is set to double to 15.4% of the total population by 2050. 

However, the market has not yet provided sufficient housing stock to meet these needs – either in terms of the number of people or the type of lifestyle currently favoured,” says Sandra Gordon, senior research analyst at Pam Golding Properties.  

The older generation is already fuelling the housing market. Buyers over the age of 50 years increased to 33.06% of total buying at August 2017, up from 22.09% in 2007, says Johan Loos, household and property sector strategist at FNB. 

Growing demand

Predictably, developers, investors and even JSE-listed companies appear to have more of an appetite for retirement properties than they might have had in the past.  

Demand for quality accommodation among the growing numbers of middle- to upper-income retirees is swiftly outstripping supply, says James Wilson, CEO of the Amdec Group, a privately owned property developer and investment company.  

Among the Amdec Group’s 12 brands is its award-winning Evergreen Lifestyle Village brand.   

Evergreen recently partnered with PSG Alpha Investments, which has acquired a 50% stake in the retirement brand. The PSG deal with its R675m capital injection will aid in accelerating the Evergreen offering from the current 500 homes to around 3 000 over the next three years.  

The goal beyond seven years is 10 000 units. “Scale is important as this allows us to keep our levies low,” Evergreen Retirement Holdings CEO Arthur Case tells finweek.   

Aside from extensions in all current villages, Evergreen is developing 950 units in the Western Cape, 485 units in the KwaZulu-Natal (KZN) Midlands, and 800 in Port Elizabeth. The brand also recently acquired land in Umhlanga Ridge in KZN where 640 units will be constructed.  

Meanwhile, JSE-listed Balwin Properties is developing 307 retirement units in Paardevlei in the Western Cape while Pembury Lifestyle Group (PLG), the first JSE AltX-listed entity with a retirement sector offering, operates six retirement facilities under its Pembury Lodge brand and aims to increase that portfolio to 16 properties.   

Lifestyle changes 

The shift in how the older generation chooses to live during retirement has meant that retirement property offerings have evolved radically. They are a far cry from the typical old-age home of yesteryear. 

Today secure, upmarket retirement properties are expected. That could mean urban lock-up-and-go apartments, sectional title complexes or retirement villages. 

Increasingly, they are looking to lifestyle estates to provide safe, superior retirement accommodation, as well as access to medical facilities and sophisticated lifestyle amenities.  

“Baby boomers are living 10 to 25 years longer than their parents, and opting for a more active lifestyle, so there is no desire to live in a typical old-age home,” says Jason Shaw, national sales executive for Pam Golding Properties.   

Retirement properties are springing up around the country. New sectional title retirement estate La Vie Nouvelle in Broadacres, Fourways, offers an exclusive lifestyle as well as a comprehensive frail care and medical centre. 

Set to open its doors in December is Lonehill Manor in Lonehill, offering a range of freehold, sectional title, assisted living and frail care accommodation.   

In the pipeline at Steyn City, the colossal 809ha mixed-use residential estate north of Fourways, are 400 retirement homes in partnership with a specialist retirement village developer.  

Among the many retirement properties along KZN’s North Coast are those in the Sibaya precinct and Forest Village on the Brettenwood Coastal Estate.  

What will possibly become the Evergreen brand’s flagship will be its Val de Vie offering in Paarl in the Western Cape. 

Located in the prestigious Val de Vie lifestyle estate will be a retirement scheme of 400 houses and 200 apartments, as well as a frail care facility and clubhouse, says Val de Vie’s marketing director Ryk Neethling.   

“Its setting in the centre of the Val de Vie estate will not only provide a safe and secure environment, but will ensure an integrated rather than separate lifestyle,” he explains.  

In keeping with the rest of the estate, the offering will be a world-class one, Neethling tells finweek. Here the entry-level for a 128m2 two-bedroom, two-bathroom freestanding house will be priced at R2.9m with levies (which also cover basic medical care) of R3 325 per month. 

With its own boreholes and filtration plant, the estate will be totally independent of municipal water, adds Neethling.  

Says Case: “At an average price of around R3.5m for a three-bedroom home, it is the best way to get into the Val de Vie estate. Not only do you have access to all the Evergreen benefits but all the Val de Vie facilities as well.”  

Investment proposition 

Aside from offering outstanding lifestyles for retirees, retirement properties in estates have also become an attractive investment proposition, even for younger buyers.  

“According to New World Wealth, estates with retirement housing are growing in popularity. With many retirees not in a position to purchase a home, there is a thriving rental market in the sector,” says Gordon.  

“Buyers below the age of 50 are also giving increasing consideration to acquiring a property with a view to their future requirements. Such a home can be rented out until they wish to move in,” adds Shaw.  

The purchase of a retirement property as an investment should be approached in the same way as any other property investment, says Maystone Wealth’s Kevin Joss. 

“You have to look at supply and demand as well as yield and compare this to other buy-to-let properties.”  

But the buying of a retirement property is more often than not about a lifestyle investment rather than a financial investment. 

This is particularly true of properties purchased through the life rights model where the capital investment is one that does not grow.  

Evergreen, which intends listing in around three to four years, adopts this model. “It’s a good business model and the primary one used around the world. Evergreen sells a lifestyle. 

With the life rights model the developer manages the villages and remains committed for life. The life rights model is almost like an insurance policy. It allows us to deliver the lifestyle retirement dream and when you need it, care with dignity,” Case tells finweek.

Retirement Property

This is part of the cover story that originally appeared in the 16 November edition of finweek. Buy and download the magazine here.

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