Retirement is not what it used to be. And neither is the housing options that baby boomers are gravitating towards. Traditional over-60s care homes, often consisting of rows of ugly face-brick bedsitters in remote locations on the outskirts of cities and platteland towns, are becoming obsolete.
Even the term “retirement village” is disappearing from the industry’s lexicon, with “senior living communities” now the preferred phrase.
In a newly published report on Africa’s senior living market, global real estate advisory firm Jones Lang LaSalle (JLL) says the continent’s 60+ population is set to triple by 2050 to more than 200-million.
Francois Lategan, strategic consulting director at JLL Africa and author of the report, says most care for the elderly still occurs informally within households. But he adds that rising urbanisation, longer lifespans on the back of improved health care and changing family structures (smaller households in particular) are creating unprecedented demand for specialised senior living facilities.
Lategan says while the world’s eyes are on Africa’s youth, a compelling investment opportunity has emerged to house the continent’s ageing population. Supply remains severely constrained, serving only a small fraction of pensioners. Lategan reckons the “silver opportunity” remains largely untapped, especially in South Africa.
Lategan says 46% of all senior living properties in South Africa are aimed at the lower-income or subsidised sector, while the luxury segment accounts for only 2%. It’s a discerning and growing market that wants to spend “the golden years” very differently from the final years of previous generations.
He says: “Modern senior living is moving away from traditional care homes towards bright, open apartments with on-site amenities, landscaped grounds and hotel-style services with optional medical care.”
Growthpoint Properties is the first JSE-listed property stock to enter the space via its health-care property fund (GHPH). The fund is managed by Growthpoint’s fund management business, Growthpoint Investment Partners. In October last year, the GHPH acquired Auria Senior Living’s R2.4bn property portfolio and operations spanning four communities.
The Auria acquisition takes GHPH’s assets under management to R6.2bn, including hospitals and medical suites as well as pharmaceutical manufacturing and warehousing facilities.
Farhana Russell, fund manager at GHPH, tells the FM the rationale behind the Auria investment comes on the back of the growing trend among health-care funds in the UK and US to allocate a sizeable portion of capital to the senior living subsector.
The Auria acquisition offers GHPH a first-mover advantage in what Russell says is still an emerging institutional asset class domestically. She believes South Africa is ripe for senior living solutions that address the shortage of “well-run, people-centred communities that offer access to world-class health care and wellness infrastructure”.
Auria’s business model is aimed at the higher LSM markets and offers what the industry terms a “full continuum of care” approach: from independent and assisted living to frail care and other specialised support services. “A key selling point is that you’re buying into a purpose-built, amenity-rich community that offers the full spectrum of lifestyle and health-care facilities,” says Russell.
These include gyms, heated pools, bowling greens, coffee shops, restaurants, hair and nail salons, and wellness centres with access to physiotherapists, biokineticists, nurses and other health-care practitioners.
Auria’s existing portfolio includes three communities in Joburg — San Sereno in Bryanston, Melrose Manor in Melrose and Royal View on the Royal Johannesburg & Kensington Golf Club in Sandringham — and one in Cape Town, Woodside Village in Rondebosch.
There are more than 1,600 people on the group’s waiting lists, which Russell says indicates the strength of the Auria brand. Auria’s developments are sold on a life rights model as opposed to conventional freehold or sectional title ownership. Residents buy the right to live in a specific unit for life, while the operator retains ownership of the property and generates recurring cash flows through the resale of the life right.
Russell says senior living assets appeal to institutional property investors because they are defensive, with demand less exposed to economic cycles than office or retail property, for example.
On resale, Auria refunds 70%-80% of the original sale price to the seller or their heirs, while it retains 20%-30% and the capital growth of the life right. While senior living developments don’t generate steady monthly rental income streams that are typical of commercial or other health-care properties through contractual leases, Russell views it as bulk rental income received upfront.
Prices at Auria’s existing villages span a broad range, from R1.6m to R1.9m for one-bedroom apartments at Melrose Manor and San Sereno. Standalone two- and three-bedroom garden villas at San Sereno start from R3.8m. At Royal View, apartments are priced from R3.125m, while units at Woodside start from R3.35m.
Russell reckons the portfolio could reach at least 10 communities within the next five to seven years.
The pipeline includes Coral Cove, a R1bn development in Salt Rock, KwaZulu-Natal, which offers a mix of 238 assisted living units, apartments and freestanding garden villas priced from R1.95m to R5.5m-plus. Coral Cove is 70% sold, which Russell says underscores the shortage of luxury senior living options.
It’s a gap that the developers of Steyn City, the residential lifestyle estate spanning 800ha of parkland on the northern outskirts of Sandton’s Fourways, are also looking to bridge. The estate, the site of some of Joburg’s most valuable trophy homes, opened a senior living village in April.
This places Steyn City among only a handful of true multigenerational estates — developments with a dedicated retirement component fully integrated within a community of residents of all ages. Other examples include Paarl’s Val de Vie Estate in the Cape Winelands and Silver Lakes Golf & Wildlife Estate in Pretoria.
Steyn City’s initial offering of 100 one, two, three and four-bedroom apartments at City Centre, the estate’s mixed-use live, work, dine, shop and play precinct, are dog-friendly and offer generous layouts with balconies and top-notch finishes. Apartments range in size from 70m² to 370m² and are priced from R1.9m to about R14m.
Lifestyle amenities include a hydro centre with an indoor heated pool, spa bath, sauna and steam room, cardio and weight-training equipment, a Pilates/yoga studio, and a coffee shop. There is also a sky bar and lounge, à la carte restaurant, craft and games room, all decorated by Design Collective, the same firm responsible for the interiors of Steyn City Hotel by Saxon.
This is a prime example of what intergenerational living should be
— Steven Louw
Steyn City Properties CEO Steven Louw believes a key appeal of the estate’s senior living offering is that it is fully integrated with the City Centre, providing immediate access to the same restaurants, shops, leisure, wellness and co-working facilities enjoyed by all Steyn City residents.
“This is a prime example of what intergenerational living should be. There’s nothing else like it in Gauteng,” he says. “Residents at Steyn City can remain part of the community as they age. You never have to leave.”
Louw tells the FM there has been keen interest from local and offshore buyers alike, particularly from the UK, France and Australia, some of whom are swallows looking for a seasonal home within a highly secure and professionally managed lifestyle estate. Steyn City is catering to the high LSM market, where an increasing number of 70-plussers are still working part-time, sit on company boards and travel extensively — especially those with children and grandchildren living overseas.
Like Auria, Steyn City is selling its senior village apartments on a life rights model. Louw concedes that there may have been unscrupulous developers who used life rights to short-change buyers (or their heirs) with drastically reduced payouts on resale. But he argues that the life rights model provides the most practical and affordable entry into a senior living community, provided it’s backed by a reputable developer with a proven track record.
While this ownership model preserves a substantial portion of the resident’s capital, it is worth noting that their proceeds can be significantly below prevailing market value — depending on how long the life right is held. The longer the period, the wider the gap between the resale price (market value) and the amount ultimately returned.
Louw says at Steyn City senior buyers are paying only about two-thirds of the price of the same apartment sold on a sectional title basis. In addition, their capital is protected as Steyn City’s life rights model is based on a six-month payout period, with proceeds capped at 75% of the original purchase price and amortised annually over five years.
That means that in a case where someone bought for R3m, whether five or 10 years earlier, they would receive R2.25m. Someone who needs to move into frail care can also fund those costs from the remaining life rights capital.
Louw says life rights buyers are not responsible for rates and taxes, external maintenance or improvements. Transaction costs are minimal as transfer duty or VAT are not payable on a life rights offering. “So there are no hidden costs, with liquidity guaranteed by the developer.”
Data from mortgage originator BetterBond underscores the shortage of dedicated housing opportunities for pensioners, with only about 650 formal retirement complexes with roughly 44,000 units across South Africa. Bradd Bendall, BetterBond’s national head of sales, says recent data suggests that mature South Africans are choosing to remain in their primary homes for longer, whether due to lifestyle preferences or the shortage of alternative options.
Many have built up significant equity in their properties over time, enabling them to pay substantial deposits and rely less on financing when they do decide to buy elsewhere. He says this is supporting a trend among retirees to downsize without downscaling in value, a view borne out by BetterBond data showing that the average price paid by property buyers aged 60 and older in the year to April was R2.3m.
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