Surge in dedicated estates
People are living longer and remaining in better health, which has changed the face of retirement estates and left developers struggling to keep up with demand.
The World Health Organisation’s 2015 World Report on Ageing and Health says the proportion of SA’s population aged 60 years and older will double from 7.7% in that year to 15.4% of the country’s total population by 2050. The number of South Africans of 60 years and older is now about 4.2million. By 2050, this will swell to about 10million.
Tongaat Hulett Developments’ Retire KZN market research initiative puts SA’s population at 56million in 2017. It projects that the retirement market will increase by up to 5.86million by 2050.
Retirement affordability is highlighted in this research — many pensioners are struggling to maintain their standard of living, and this occurs alongside low state pension benefits. Retire KZN notes a significant shift of younger buyers in retirement estates, with as many as 60% of purchasers buying as investors.
Demand will continue to outstrip supply. “Most retirees today form part of the baby boomers born between 1946 and 1954, putting them between the ages of 63 and 71,” says Jessica Kolver of Engel & Talkers. “Since 2011, baby boomers have entered the retirement phase and will continue to do so for the next 10 years.”
High levels of debt leave many baby boomers financially unprepared for retirement. “This has significantly changed the way we see retirement and its products and services,” says Kolver.
“This group has received improved medical care and leads healthier lifestyles than its predecessors,” she says. “This leads to a demand for retirement villages and less availability in existing traditional oldage homes.”
“We’re seeing an increase in the demand for upmarket retirement housing in SA, especially with the consistent rise in life expectancy in the country over the past 10 years,” says Evergreen Lifestyle CEO Arthur Case.
The Amdec Property Group established retirement accommodation provider Evergreen after identifying this growing market, says Case. Leading financial services firm PSG has purchased a 50% stake in Evergreen, showing confidence in filling this retirement housing gap.
With villages in Johannesburg and the Western Cape, Evergreen can attract middleincome retirees who would otherwise not have been able to afford this kind of housing. The pricing, based on the life rights model, makes these homes more affordable than comparable freestanding or sectional title properties.
Last month Kuwait’s IFA Hotels & Resorts announced that it had concluded a joint venture deal with Evergreen. The partnership ensures that the R3bn retirement offering within Zimbali Lakes Resort on the KwaZuluNatal North Coast will have the capital to ensure all facilities will be completed before the first resident moves in.
Evergreen Lifestyle Zimbali Lakes will include sectional title apartments, to be sold on a life rights basis. It is geared around demand for secure retirement living for over55s and will provide a dedicated onsite healthcare centre, assisted living facilities, frail care and an array of luxury lifestyle amenities.
KwaZuluNatal in particular has seen a surge in retirement developments after a drive to attract this kind of buyer. Tongaat Hulett’s Retire KZN initiative positions the province as a retirement destination. Its research shows higher retiree demand for freehold units, particularly two-bedroom units at a price of R2m or less.
A flagship development is the Mount Edgecombe Retirement Village on the North Coast, within the established Kindlewood Estate and adjacent to the Mount Edgecombe Country Club Estate.
By December last year, more than 60% of 110 units in phase one of this estate had sold. It will be developed in three phases comprising 263 units. The care centre and phase one units are intended for completion and occupation towards the end of 2018.
“We are seeing that retirement villages are coming into their own, without compromising on quality,” says Mount Edgecombe area principal for Pam Golding Properties Sally Cameron. “They not only provide all the facilities offered by residential estates but supply the additional service of comprehensive medical care.”
Cameron says the investment aspect is an appealing drawcard. Buyers are happy to see the benefits of capital growth in their property acquisition, as well as the potential to let the property before their own occupation. If the property is let, tenants have to be more than 55 years old.
High quality one, two and threebedroom living units and a limited number of freestanding homes are selling from R2.5m to R4.5m. Engel & Volkers Southern Africa CEO Craig Hutchison says that today’s developments encompass pleasing design, community living and topflight facilities, as well as proving to be a growing capital investment.
Engel & Volkers’s De Land Estate in Potchefstroom is a good example. It is a 30ha security development on the northern side of Potchefstroom — 90 minutes from Johannesburg — and part of the estate is a 4ha village for the 55plus age group.
Retirement developments around the country report rapid rates of sales. Palm Vue, the sixth and final block of the Oasis Luxury Retirement Resort at Century City has already sold 35 of 42 units, six months before completion.
The 11-storey building, comprising one, two and three-bedroom apartments, is being developed in a joint venture by the Rabie Property Group and a Harries Projects consortium at a cost of R270m. Apartments, which range in size from 94m2 to 247m2, including terraces, are priced from R3.4m to just more than R10m, VAT inclusive. No transfer duty is payable.
Similarly, at De Plattekloof Lifestyle Estate, 20 minutes from the centre of Cape Town, sales hit the R114m mark in September last BuhRein near Durbanville, Cape Town year, 120 days after launch, with R56m secured in the first 30 days. To date, the estate has achieved sales of about R168.3m.
De Plattekloof Lifestyle Estate is an Arun Lifestyle project, backed by Arun Holdings and Old Mutual.
“We are pleased at the interest and uptake,” says Johan Loubscher of Arun Lifestyle. Located on the edge of the Northern Suburbs, the estate is attracting buyers from both greater Cape Town and the Northern Suburbs, says Loubscher.
The successful Helderberg Manor Retirement Village in Somerset West has launched a block of apartments to satisfy high demand. To be completed in mid2019, the block will offer eight units, consisting “Since 2011, baby boomers have entered the retirement phase and will continue to do so for the next 10 years” Jessica Kolver, Engel & Volkers Mount Edgecombe, KwaZuluNatal North Coast Waterfall Hills Mature Lifestyle Estate, MidrandFeatherwood, Pretoria East of two-bedroom, one-bathroom apartments priced at about R1.6m.
“The fact that most facilities have been completed at Helderberg Manor makes these apartments very attractive to prospective buyers,” says Devmark founder and CEO Hein Ehlers.
La Recolte Retirement Village in Stellenberg, Durbanville, is another development that has had good sales. Phase two will include Block B of 42 units. Launched in September last year, more than 60% has sold.
“The development is close to Tyger Valley Shopping Centre, Willowbridge, the Durbanville Winelands, hospitals and clinics. It also offers easy access to the Ni highway,” says Engel & Talkers’ Kolver.
The Plettenb erg Manor, recently listed as one of the country’s top 10 retirement estates, will cater to rising demand in the Garden Route. When completed, it will offer 111 luxury homes and exclusive cottages, as well as 54 assisted living suites and healthcare facilities. Prices range from about R1.82m to R3.82m, including VAT with no transfer duty.
“Plett is growing, both nationally and internationally. We’ve seen an influx of buyers, especially from Gauteng, who hope to retire in the Southern Cape. There is already a shortage of retirement estates in the area and by all indications, demand will only increase,” says Devmark’s Ehlers.
Evergreen Val de Vie in Paarl has sold more than half of phase one. Residents will start moving in towards the end of 2018. Val de Vie benefits from natural surroundings, worldclass security and access to all amenities of the broader estate, which was rated as the number one residential estate in 2015, 2016 and 2017 by New World Wealth.
Award-winning Buh-Rein Estate in the Northern Suburbs of Cape Town will now also cater for the elderly with the introduction of the Buh-Rein Retirement Village in 2018.
“This security village will comprise close to 500 sectional title properties, consisting of one and two-bedroom luxury apartments with covered parking bays and covered walkways for the convenience of all residents,” says Multi Spectrum Property marketing manager Werner Scheffer.
“The Care Centre with frail care services and dementia units are further complemented with a state-of-the-art memory bureau for expert advice.” The bureau’s staff will offer counselling to family members on conditions that affect the memory, such as Alzheimer’s Disease.
In Gauteng, properties at Waterfall Hills Mature Lifestyle Estate and Waterfall Valley Mature Lifestyle Estate have proved to be solid retirement investments. Now sold out, the 442 freestanding homes and 60 apartments have increased in value since 2010 by an average of 200%. A 270m2 house bought for R2.6m in 2010 is now worth more than R5m.
Buying to rent has proven successful. “Owners are receiving high rental returns, easily covering their expenses, all the while benefiting from exceptional capital appreciation,” says Century Property Developments CEO Mark Corbett.
While countryside retirement estates with self-contained amenities are popular among the target market, city-based estates or retirement blocks are also gaining attention. Featherwood Retirement Estate, marketed by Seeff Pretoria East and located close to the Woodlands Mall and Pretoria East Hospital, offers houses and units for active residents, and assisted living facilities. There is also round-the-clock frail care.
Prices range from R1.135m for a two-bedroomed unit to R1.79m for a unit with three bedrooms and two bathrooms. These units are sold on life rights and sectional title.
While good health and longevity are desirable, this leads to competition for space in leading retirement estates. Property developers are taking notice of this demand and are building furiously in an attempt to keep up. The next generation of retirees had better hope that they keep building quickly enough.