RETIREMENT REINVENTED
New-generation senior living developments are set to replace SA’s outdated retirement village model
Unlike the US and Australia, where retirement property is regarded as a lucrative asset class in its own right, the sector has been largely ignored in SA. Now that’s changing, as more private equity investors and developers bring innovative senior living products to the market.
Gidon Novick, former Comair CEO who last year launched new domestic airline Lift, is one such investor. Novick’s Lucid Ventures, the hospitality investment company he co-founded in a bid to redefine the boutique hotel space in SA, is now also betting on the retirement sector.
Lucid’s newly formed Lucid Retirement Living Fund, a section 12J investment vehicle, hopes to cash in on what Novick believes is a growing shortage of high-end, lifestyle-orientated retirement developments.
SA’s population of over-60s already stands at about 5-million, and is expected to reach 9-million by 2040.
Novick believes strong growth in SA’s older population, coupled with increased longevity and changing lifestyle expectations, will create rapidly rising demand for facilities that offer a personalised, hospitality approach to care — unlike the highly institutional retirement village model most South Africans are accustomed to.
“Until now, most South Africans approaching retirement have had to be satisfied with dated living facilities, often in outlying areas, and having to move between living spaces as they age and their needs change,” says Novick. “But Lucid Retirement Living turns this paradigm on its head, offering modern, digitally advanced and centrally located facilities, and the opportunity to live in the same unit for life.”
He believes growing demand for more sophisticated retirement products — and the tax benefits offered by the 12J structure — mean Lucid’s closed-end fund will appeal to investors looking for a growth and portfolio diversification opportunity.
About R80m has already been committed. Novick hopes to raise further capital before the end of June, when the current investment tranche closes.
Land has been secured to build two retirement developments in Joburg — one in Rosebank and one in Houghton — while more development opportunities in Joburg’s northern suburbs, as well as on Cape Town’s Atlantic seaboard, are in the pipeline.
Novick says the fund is aimed at individuals looking to invest a maximum of R2.5m. The investment term is five years and exit liquidity is provided through the sale of life rights to long-term residents in the facilities financed by the fund.
He’s targeting an after-tax return of at least 20% a year for those who invest at the marginal tax rate for the full five-year term.
Meanwhile, developers Amdec and Auria, also backed by private equity, have already gone some way to reinvent SA’s outdated retirement living model.
Amdec, which part-owns upmarket Joburg mixed-use precinct Melrose Arch and is behind the huge Harbour Arch development in Cape Town’s CBD, entered the retirement sector in 2008 under the banner of its Evergreen
Lifestyle subsidiary.
Evergreen Muizenberg was its first retirement village. Since then, six more have been added to the portfolio in the Western Cape, as has one in Gauteng. Another five villages, mostly in KwaZulu-Natal, are in the development pipeline.
Evergreen Lifestyle sales director Phil Wilson says the company’s philosophy is based on five pillars: physical security, financial peace of mind, continuous care, a sense of community and exceptional hospitality.
Auria, founded by chartered accountantturned-developer Barry Kaganson, entered the sector in 2017 when it bought its first development — San Sereno retirement village in Bryanston, Joburg.
The complex, which spans 5ha, was built in the 1980s by Sanlam.
Auria has renovated San Sereno extensively, turning it into what Kaganson describes as a new-generation senior living community.
Auria’s approach is based on the “continuing care retirement community” model, which he says promotes independent living for people aged over 70 — with assistance available if needed in terms of meals, medication management and day-to-day living. Frail- and dementia-care facilities are also provided.
As Kaganson puts it: “Essentially, our aim is to provide a quality lifestyle for older adults, in line with global best practice from a design, hospitality, social and wellness perspective.”
Auria recently added two more Joburg developments to its portfolio, and expanded its footprint to the Western Cape, where it bought a majority interest in Woodside Village, an existing development on 3.6ha in Rondebosch.
The challenge, Kaganson notes, is to find large-enough tracts of vacant land — or older, existing projects of scale with redevelopment potential — within central locations near established suburbs, shopping centres, hospitals and other amenities.
“When you reach your 70s, you want to stay in familiar areas within easy reach of friends and family,” he says. “So there’s no point in us developing stock out in the sticks.”