Real Estate Investor Magazine South Africa March/April 2020 | Page 63

A
Sanlam survey in 2019 indicated that only 8% of
South Africans are able to retire with sufficient
savings to provide an income at a replacement ratio
of 75%. The reality is that, at retirement, retirement savings
have a certain income purchasing value and, if drawn above
this value, they run the risk of outliving their capital.
Meanwhile, a 2017 Sanlam Glacier report, in the case of a
couple aged 65 today, stated that there is a 50% chance that
one of them will live reach age 94. There is a 25% chance that
one of them will live to 100.
Given this outlook the need for affordable housing for
pensioners is extremely urgent and necessary. Developers
have focused on the high-end market in the last 15 years with
many examples of exceptional design and luxury living in
retirement that can compete with the best around the world.
But what about the middle-class market who have limited
financial resources?
In 2018, the housing backlog reportedly stood at 2.3 million
houses and was growing by approximately 178 000 houses a
year. South Africa's first affordable house market index released
on the 29 October 2019 indicated that properties in the “gap
market” (priced between R250 000 and R500 000) are more
resilient, and generated the most activity in the third quarter
compared to the rest of the residential market.
With 92% of retirees being under-funded for retirement,
more and more pensioners are relying on their adult
children for financial support. A 2015 Old Mutual Savings
and Investment Monitor found that 25% of the sandwich
generation are supporting their children and aging parents at
the same time.
What this means for developers
There is an old-new market for affordable retirement buyers
either in rental only or below R1.5m price point purchase. This
affordable price range means that the average house selling
for R1.5 to R2.5 million will afford a retiring couple either a
swop with a reduction in maintenance and running costs or an
extra million or two to invest, thereby helping to ensure they
will have sufficient funds to see them into their 90’s.
RETIREMENT VILLAGE LIVING
Design & building for retirement villages can apply to
any normal estate living. What differentiates a retirement
village over & above the age criteria is:
Care
Provision of meals
Lifestyle choices
If working on a rental only basis an extra R1.5 million
from the sale of a home would equate to 8.3 years if paying
R15K monthly. That would make a substantial difference to
someone’s retirement quality of life and may also reduce the
sum needed to live on for those 8.3 years would also improve
the value of the pension.
A rethink of building methodology
All across the world there has been innovations of flat pack
built at factory and assemble on site, rammed earth. Homes
built with alternatives to bricks such as bottles, hay etc. Radiant
heating is very affordable, double glazing. Building off the grid
as Eskom struggles to provide electricity is already a desirable
purchase point for prospective buyers. Water solutions will not
be far behind given the lessons learnt from Eskom.
Design
Smaller homes built with materials that are easy to maintain, that
can stand wear and tear, are user friendly for mobility solutions
and take into account aging issues such as reductions in flexibility
and balance. However, to make a home from 30 sqm to 50 sqm
more than doable, space needs to be designed effectively.
“Developers have focused on
the high-end market in the last
15 years. But what about the
middle-class market who have
limitexd financial resources?”
Retirement village living
It is a common trend that retirement villages are often situated
in areas that allow easy access to hospitals and services for the
residents. This concentration should be considered an opportunity
to seriously rethink retirement solutions for everyone.
Providing frail care is expensive although for some a
necessity. But instead of thinking of retirement villages as single
entities perhaps they should be looked at rather as a collective
where services can be pooled by various retirement villages.
This can apply to facilities in retirement villages or services
like frail care, pools, gyms, occupational therapy, doctors and
beauty therapists. All these can be used on a space-as-a-service
basis much like WeWork or Airbnb.
The central resource centre drives the cost of running a
retirement village substantially down, provides residents with
a greater circle of potential friends and the centre can provide
more unique offerings such as ceramics, woodwork, sculpture,
business centre and storage options that best reflect the
interests and needs of its customers.
The care component could provide different levels of care
solution from short stay recuperation to advanced dementia
with on-site access to specialist care.
In the future retirement will not be what is seen today to
be, but rather a response to the demands of residents and
the focus will be on various residents’ experience. Retirees
crave personalized, frictionless experiences, and companies
are sprinting to deliver them. Retirement villages will also be
competing to win in the Experience Economy much like any
other business.
SOURCE Sanlam, Old Mutual
SA Real Estate Investor Magazine MARCH/APRIL 2020
61