BUYING RETIREMENT PROPERTY
number of South Africa’s elderly requiring a retirement home is growing. Currently, those aged 60 and over make up 8% of the population, while those 50 years and above comprise almost double that at 15.8%, according to a mid-2015 report released by Statistics SA. Retirement property meanwhile is not keeping pace, comprising only a small portion of SA’s housing stock.
A lack of supply means retirement homes are relatively scarce and expensive, especially for those with modest funds who battle to find accommodation often facing long waiting lists.
But for those in the middle- to upperincome brackets, the situation is somewhat more favourable. And given the evolution of retirement lifestyle estates, more are electing to retire earlier. Some of the younger and more forward planning are even expediting their retirement property investment well in advance of their retirement, while other savvy investors are merely banking on these properties to provide a meaningful investment. Unsurprisingly, this is where an increasing number of developers are concentrating their housing efforts.
The pull of the coast
According to FNB’s Property Barometer, 26% of sellers are those selling in order to downscale with life stage. Of the 10% selling to relocate within SA, a significant portion are those retiring to other regions.
Those other regions are often coastal. It’s no myth that coastal areas are a pull for retirees. And savvy developers are not unaware of this.
From Forest Village on Brettenwood, Lazuli Estate, and soon-to-launch Zimbali Lakes Resort on KwaZulu-Natal’s prestigious north coast, to Negester Retirement Village near Hermanus in the Western Cape, over 50s lifestyle and retirement estates are popping up all over the country’s coastal strips, catering to the sophisticated lifestyle that many retirement property owners have come to expect. But sophisticated retirement living does not come cheap, and buyers can expect to pay upwards of around R3m for a two-bedroom apartment or simplex in many of these 50-plus coastal estates.
In the country’s inland areas the upsurge in properties catering to the over 50s crowd is also on the climb, where large lifestyle estates like Waterfall Country Estate often incorporate retirement properties into their gated enclaves.
Others, like the recently launched Heritage Estate in the new growth hub area of Modderfontein east of Johannesburg, cater exclusively to the over 50s market.
At a total investment cost of between R850m/R900m and developed by Norym Properties, the 90 000m2 estate is being sold in phases from 1 April with all phases expected to be completed within two years.
The 162 sectional title units comprising penthouses, simplex units and apartments, range in size from 65m2 for a one-bedroom, one-bathroom apartment priced at R1.1m, to a 183m2 three-bedroom, 2.5 bathroom penthouse costing R3.8m.
“The average cost per square metre comes in at around R16 900,” Myron Economacos of Norym tells finweek, “and phase one, consisting of 28 simplex units – a value of around R60m – has already sold out. When fully complete, around 1 000 people will be living on site,” adds Economacos.
In addition to the development of new homes, the existing historic Heritage House, built in 1910 as a sanatorium and one of the locations for the filming of Hotel
Rwanda, will be refurbished into attractive living spaces for residents. Heritage Estate will also offer assisted home-based care through healthcare provider TruCare via a monthly medical levy of between R600 to R1 000.
An old head on young shoulders
But it is not just the mature buying into retirement properties. While the average age of Heritage Estate buyers is 68, says David Coutinho of Pam Golding Properties, Johannesburg East, some investors not meeting the minimum age of 50 to live on the estate have purchased properties with a view to renting them out, he says. Whether or not these younger investors take occupation at a later stage, it is apparent that they are cognisant of demand for properties such as these and expect to enjoy ongoing rental demand as well as significant capital growth.
Given the trend for earlier retirement as well as increased life expectancies, catering to the retirement requirements of the mature in the middle- to upper-income brackets has evolved significantly over the last few decades. Now quality retirement properties not only offer increased independence and outstanding lifestyle, but also often satisfy the investment requirements of both young and old.
An artist’s impression of Stellendale Village in Kuils River in the Western Cape.
Heritage House at Heritage Estate, as it will look once it is refurbished.