Buy young to enjoy years of older lifestyle

Learn about different ways to invest to new retirement living models, and the pros and cons

DEVELOPERS are furiously playing catch-up to meet the growing demand for retirement accommodation, but along with this they have shifted their target to a younger market.

Wesley Smith of Carmel Properties, which launched retirement estate Shoreline Sibaya last year on the north coast of KwaZulu-Natal, says they have reduced their age limits for entry from 55 to 50 so residents can live there for longer.

“They can live here now with their mates, and go to the bars and gyms, and then continue to live (that lifestyle) here in their older years.”

Collins Residential has invested in retirement villages in KwaZuluNatal, and says they have also shifted their target to a younger market.

Collins Residential director Murray Collins says: “Residents should be spending their last 30 years in a wonderful place, and not just their last five, when they cannot really appreciate it.” The retirement development industry is booming, but the issue of care still poses major challenges. The “continuous care” model, for example, is a trend, but how do retirees fund this?

“Frail care, no matter how well you build units or work out the right number of units, is expensive, and most medical aids do not cover any kind of frail care,” says Evergreen chief executive Arthur Case. New insurance or medical aid products could be one solution, while another could be cross- subsidies, which he favours, but admits most developers do not.

“With this a portion of your levy goes towards frail care so when it is your turn to be there the costs are not so astronomical.”

“Dropping” retirement offerings into established estates can also assist. If all residents use care centres and/ or the estate takes patients from “outside”, it can improve the financial model.

Retirees also face purchasing challenges. Due to the nature of the “life right” model, they cannot qualify for mortgage bonds. However, the average middle-income South African family has a home that is paid for and modest retirement savings,” Case says.

“We try to bring to market a product at a price slightly lower than the comparative free-market price so, hopefully, when you sell the family home to buy a life right, this can free capital to augment your retirement savings.”

Even buying sectional title units in the traditional way has been an challenge for retirees, says Wesley Smith of Carmel Properties. Banks will not grant a retiree a mortgage bond even if they already own a home worth more than the unit they want to buy. The company had to find a partner organisation to provide guarantees on behalf of its buyers.

PICTURE: CARMEL PROPERTIES The first brick in the ground at Shoreline Sibaya in KwaZulu-Natal was the care centre, which is regarded as the most important aspect of a retirement village.