Boom in retirement real estate

The world’s population is aging at an accelerating rate with people aged 65 years and over comprising a bigger share of the world’s elderly population. The dramatic growth in this population group has arisen from improvements in life expectancy and has implications for many countries around the globe. 

 A report commissioned by the US government, An Aging World, found that with the world’s population living longer, the size of the elderly population  is projected to increase more than 60% in the next 15 years. Fast forward to 2030, when we will see 12% of the global population being elderly – one billion! This growth will continue and the elderly population is expected to reach 1.6 billion in 2050 (16.7 % of the total world population). In South Africa, statistics show that by 2030 our retired population will surge to 6.8 million individuals.

This has implications for the accommodation needs of this population cohort.  In Australia, a report by the Property Council of Australia, reflects that  the demand for retirement living will double between 2015 and 2025. Similarly, the demand for housing among retirees remains strong. And so, the retirement development sector is seeing more companies clamber on board to provide housing to meet the demand. In doing so, they are reworking what retirement accommodation looks like. 

Lockdown has highlighted the attraction of  retirement estate living due to its perk of offering a sense of community support along with a ream of services and amenities. These benefits are  driving interest in this type of accommodation and in its purchase model, which is known as  the life rights  model. Buyers  purchase the right to live in a home in a retirement village but the developer retains sole ownership of the property and carries the responsibilities for maintenance, the management of clubhouses and of health/frail-care centres.

One of South Africa’s largest retirement estate living developers, Evergreen Property Investments, has plans to grow its national footprint tenfold to R30 billion in the next decade. With 750 000 of housing (over 5 000 units) and facilities across 13 retirement villages either under construction or in the planning phase, its management was understandably relieved when the sector was given the green light to resume work.

“The retirement industry was hit hard when the construction industry was halted during lockdown. We had to put the brakes on seven construction sites as well as new projects where we employ close to 7 000 people,” says Cobus Bedeker, Managing Director of Evergreen Property Investments.  “And we’re now playing catch up – at high speed – to meet both demand and our goal to grow our base from 1 000 to providing retirees with 10 000 homes across South Africa by 2030.”

But Bedeker says the COVID-19 pandemic has highlighted that there is tremendous demand for retirement options based on the life right model. Lockdown has brought to light the degree of dependence we have on each other and even more so as we grow older which is driving a move to relocating sooner than later into retirement property.

The company has seven operating villages in the Western Cape and Gauteng, with six in the development pipeline between now and 2023. In total there are an impressive 5000 units in play, worth a collective R15 billion.

“Despite lockdown, we launched 125 homes over two villages for sale to the public.  Construction is forging ahead with four developments that will deliver 300 homes at Evergreen Noordhoek, Val de Vie Evergreen and Evergreen Broadacres in Johannesburg over the next six months. To top this, civil construction has commenced with roadworks in completion at its luxury retirement village in Somerset West, Evergreen Sitari,” says Conrad Bos, head of construction at Evergreen.

In addition to the new developments in the Western Cape and Gauteng, KwaZulu-Natal is also experiencing a retirement property surge.  At the moment this province, with a population of 11 million, is home to  925 863 residents aged 60 and older. Stats SA data suggests this may burgeon due to increased semigration rates into Kwa-Zulu Natal, which is expected to intensify from 275 920 people in 2016 to 307 547 in 2021. Evergreen’s North Coast master plan includes large developments in Umhlanga, Zimbali (Ballito) and Hilton where prime land has been secured.

Going into 2021, Evergreen’s commitment to the retirement market will be on developing health and lifestyle facilities at some of its developments as it reveals individual frail care centres and lifestyle centres at its villages along with a memory care facility for dementia and Alzheimers care.

“Also on the cards is a retirement village set for Amdec Group’s multi-generational estate in Port Elizabeth in the Eastern Cape, Westbrook, that sold a record number of homes during lockdown in June,” Bos adds.

While the traditional old age home had an institutional nursing culture, the lifestyle retirement village has a hospitality culture with a strong community feel, and is packed with an array of amenities, facilities, healthcare centres and entertainment. 

“Retirees are looking for luxury living with resort-style facilities, lock-up-and-go security and convenience that includes estate management and service of a highest standard,” Bedeker concludes. “And this, coupled with the increasing size of the retiree population, is what is driving demand.”