SA’s retirement property market has upside potential July 2024
Lightstone has identified around 650 retirement complexes in South Africa - either Estates or Sectional Schemes - which use words like "retirement", "old age", "bejaard", "aged", or "outehuis" in their name.
Some 350 of the complexes are made up of properties registered at the Deeds Office (a total of 44k units), while around 300 entities are registered as one property at the Deeds Office but owned by, or allocated to, social services who manage units.
At most, these 650 entities account for less than an estimated 100 000 units and no more than 125 000 individuals, a small proportion of the over five million people who are 60 years of age or older.
ALSO READ - Women Takeover the Markets
The 350 complexes containing units registered at the Deeds Office account for 44 000 properties, of which 33 000 are privately owned and 11 000 are owned by companies or trusts.
These properties house anything between 44 000 to 88 000 people, assuming one or two people live in each property. More than half of the properties are valued at more than R1.5m (see graph below).
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 (see graph below).
Some 35% or 15 000 properties are in Estates (gated communities with a shared access/exit gate) and 65% or 29 000 are in Sectional Schemes.
A total of R29 billion has been spent on more than 15 000 properties at an average price of R1.9m in retirement complexes over the past five years (see four tables below).
While sales have mostly occurred in Gauteng, Western Cape and KwaZulu-Natal, the Western Cape has had the highest average sales prices.
READ THE FULL ARTICLE HERE TO SHOW GRAPHS FOR
The majority of the 1.5 million non-retirement properties owned by >60yrs olds, (which excludes 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.
Sales volumes and average prices paid have been relatively consistent over the past 10 years, other than the Covid fall in 2020.
ALSO READ - LADY LAWYER TALK with MILTONS' Liz Hymns
The proportion of sales to over >60yrs olds, and the average price they paid relative to the market, can be seen in the graph below.
A provincial comparison of retirement properties v non-retirement properties owned by people over 60. Average value of stock owned by >60yrs old shows the average value of properties within retirement villages is consistently higher than the value of homes outside retirement villages, and it also shows the limited number of homes within these retirement entities. The graph also demonstrates that the Western Cape leads the way in terms of retirement properties followed by Limpopo, Gauteng and KwaZulu-Natal.
BROWSE THE FACEBOOK FRIENDS PAGE