MAIN IMAGE: Hayley Ivins-Downes – managing executive real estate at Lightstone
Kerry Dimmer
Agents looking to tap into markets that have real potential for sales need to take a serious look at the retirement market.
In a recent report, Lightstone revealed that while there are 650 formally registered commercial retirement complexes in South Africa – either estates or sectional schemes – they actually comprise just under 100,000 units, accommodating no more than 125,000 individuals. This suggests that such villages are targeting the upper end of the market, leaving the balance of the 5 million (StatsSA 2022) retirees to shop for properties in the open market.
Deep diving into the analysis is Hayley Ivins-Downes, managing executive real estate at Lightstone. “The bigger picture is that of the country’s 5.45 million residential properties (excluding social housing), approximately one-third is owned by the 60+-year-old market. A quarter of these owners bought their properties after they turned 60; 1.5 million purchased traditional properties, and 1.3 million purchased subsidised housing.
“Our research has further revealed that only 44 000 units in the property retirement villages – which includes those using terms like ‘old age’ ‘bejaard’, ‘aged’, or outehuis’ in their name – were registered at the Deeds Office, and 300 000 entities registered as one property but owned by, or allocated to, social services that manage units.”
Values
Of the 44 000 properties, 33 000 are privately-owned and 11 000 by companies or trusts. More than half of the properties are valued at more than R1.5-million,” she says. “Additionally, approximately 13% of the stock was developed after 2020, and just more than 25% were built before 2000, with the balance being built in between.”
A total of R29-billion has been spent on more than 15 000 properties at an average price of R1.9-million in retirement complexes over the past five years. The average value of properties within retirement villages is consistently higher than the value of homes outside retirement villages.
Sales volumes and average prices paid have, however, been consistent over the past 10 years, other than the COVID-19 fall in 2020.
Property preferences
Around 35%, or 15 000 properties, are in estates (gated communities with a shared access/exit gate), with 65%, or 29 000, in sectional schemes.
The majority of the 1.5-million non-retirement properties that are owned by the 60+-year-old’s (again excluding subsidised units), are freehold, followed by sectional schemes and then estates. “Interestingly, though, buyers who were 60 or older when they bought their retirement homes opted for Estates or Sectional Schemes in greater numbers, while those who bought when they were younger preferred Freehold properties, reflecting the overall pattern in the property market,” confirms Ivins-Downes.
The Western Cape leads the way in terms of retirement property offerings, followed by Limpopo, Gauteng and KwaZulu-Natal.
Gap identified
These facts can easily be interpreted as the market not catering for the affordability segment, which requires more diverse and accessible retirement housing solutions.
“The gap also makes it clear that the growing senior population, whose changing lifestyle preferences creates a demand for purpose-built retirement communities,” says Ivins-Downes.
The future and the generations to come
The future also looks somewhat bleak when factoring in that half of South Africans do not have a retirement plan, stated the 2024 FNB Retirement Insights Survey. Housing costs with repayments on a R1.5-million home increased by R4 600 per month when compared to three years ago. This is one of the contributors to the 37% of South Africans over 60 now working part-time into their retirement.
If this market is not sufficiently provided with affordable housing, it will fall on their children to care for them, which, in turn, will leave this sandwich generation compromised when saving for their own retirement. Agents who step in now, while the housing market still presents properties that are selling under their value, have an opening to present those to approaching retiree’s and those who have already retired, which will at least secure a roof over their head.
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