The demand for purpose-built retirement communities is on the rise, says Lightstone with SA’s formal retirement property market, accommodating 44 000 households, representing a small but significant segment of the housing landscape.
With most seniors residing in homes purchased earlier in life, the trend of purpose-built retirement communities is being driven by a growing senior population, changing lifestyle preferences, and increasing financial security among older adults.
“The data shows that, of the country’s 5.45 million residential properties (excluding social housing), approximately one third is owned by >60-year-olds. A quarter of these owners bought their properties after they turned 60, and just 44 000 of these properties are in formal retirement villages, which suggests they are targeted at the upper end of the market,” says Hayley Ivins-Downes, Managing Executive Real Estate at Lightstone.
Homeownership of the >60-year-olds is split between subsidised housing (1.3 million), non-retirement housing (1.5 million) and formally registered commercial retirement homes (44 000) (see below).
Lightstone has identified around 650 retirement complexes in South Africa – either estates or sectional title 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 44 000 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.
“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 R1.5 million,” Ivins-Downes adds.
Value of properties
“The data clearly shows that while many South Africans over 60 own their homes, there’s a significant gap in the availability of formal retirement housing options. While we have identified around 650 retirement complexes, these only accommodate a small percentage of the senior population. This highlights the need for more diverse and accessible retirement housing solutions, particularly in the affordable segment.”
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 (see graph below).
Some 35%, or 15 000 properties, are in estates (gated communities with a shared access or exit gate), and 65%, or 29 000, are in sectional title schemes.
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 (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
Highest sales volumes over the last five years
Highest average price over the last five years
Ivins-Downes adds that the majority of the 1.5 million non-retirement properties owned by >60-year-olds, (which excludes subsidised units) are freehold, followed by sectional title schemes and then estates. “Interestingly, though, buyers who were 60 or older when they bought their retirement homes opted for estates or sectional title schemes in greater numbers, while those who bought when they were younger preferred Freehold properties, reflecting the overall pattern in the property market.”
Where do >60-year-olds choose to live?
Sales volumes and average prices paid have been consistent over the past ten years, other than the Covid-19 fall in 2020.
Transactions by >60-year-olds
The proportion of sales to over >60-year-olds, and the average price they paid relative to the market, can be seen in the graph below.
A provincial comparison of retirement properties versus non-retirement properties owned by people over 60
The graph below shows the average value of stock owned by >60-year-olds. It 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.
