BUY­ING RE­TIRE­MENT PROP­ERTY

Finweek English Edition - - FRONT PAGE - Wil­liams ByGlenda In­vest­ing into a ma­ture life­style prop­erty early is prof­it­ing both re­tire­ment in­vestors and devel­op­ers

the

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.

In­land life­style

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.

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