Medical advances mean we now live longer and that provides opportunities for developers to provide affordable retirement accommodation for the country's growing number of elderly people?.
The dearth of affordable retirement options is a growing concern in South Africa, and an issue which is seeing increasing numbers of elderly people without homes in which to retire.
Over recent years developers have been building retirement estates and villages to make up for the lack, but there are still not enough homes for the growing numbers who need them. Furthermore, the prices of the majority of available and soon to be available retirement options are out of reach for many retirees.
Based on the results of the most recent census, Statistics South Africa’s (Stats SA) Profile of Older Persons in South Africa report stated the number and proportion of elderly persons aged 60 years and older – relative to those aged 59 and younger – increased over the period 1996–2011.
“The number has increased from 2.8 million in 1996 to 4.1m in 2011, and the proportions from 7.1% in 1996 to 8.0% in 2011. Projections show the older population will continue to increase and by 2030 there will be about seven million elderly persons in South Africa.”
The report also stated the distribution of elderly people had implications on resources and funds available within each province to meet the needs of the elderly, and that more than half of the country’s elderly lived in extended households.
“The dominance of elderly persons living in extended households reflects on the fundamental role family support continues to play in ensuring the needs of the elderly are met.”
There are a number of reasons for the shortage of retirement accommodation, says Arthur Case, chief executive of Evergreen Lifestyle, a national provider of retirement living in South Africa and a division of the Amdec Group. One reason is that the state has not focused on providing accommodation for older people without adequate personal finances.
In addition, both life expectancy and the cohort of older people have increased. “According to the Institute for Health Metrics and Evaluation, people are living longer throughout the world, thanks in part to the lower rates of cardiovascular disease deaths in high-income countries and child deaths in low-income countries.
Case says Stats SA figures reflect an increase in life expectancy among South Africans from 55.2 to 62.4 years between 2002 and 2016.
There is also an increase in the size of the cohort of the population that can be classified as elderly, Case says. It is expected this group will double in size by 2050, when it will then make up more than 15% of South Africa’s population, as opposed to the current almost 8%.
Life Right property
“For many people from middle-income groups, the purchase of a home for their retirement years has been financially difficult. However, since the introduction of the Life Right concept in South Africa, a few developers of retirement accommodation, such as Evergreen Lifestyle, have begun constructing retirement lifestyle villages based on this concept, so the homes are becoming more accessible to a larger group of retirees.”
This concept assists in the growing number of cases where seniors find themselves with their children living and working overseas, and without a support network when they age.
Explaining the scheme, Alwina Muggeridge, an area principal for Pam Golding Properties, says it is critical to understand that despite the reference to buying and selling units, there is no purchase of actual real estate, but rather a purchase of the right to live in specific units.
“Ownership of the unit is retained by the development and is not transferred to the individual. The property itself does not become an asset in the purchaser’s estate and cannot be bequeathed to an heir in their will.”
The individual purchases the right to live in a unit for the remainder of his or her life, possibly with a spouse, Muggeridge says. The money paid in such purchases is a market-related and pre-determined amount.
“That purchase price is often viewed as a lifetime rental paid in advance.”
Life Right properties can be bought with loans but banks are hesitant to provide finance due to the lack of security.
“A comforting factor for families of the retirees is that most retirement centres provide opportunities for social interaction with amenities such as heated swimming pools, gym facilities, lounges and TV rooms, and make provision for private space in the gardens, balconies and libraries. Families know if the family member encounters problems, health or otherwise, there are staff on hand to look after them.”
Case says the Life Right model has provided impetus for development of more retirement units.
“It makes ownership of retirement accommodation available to more people and has become more attractive to property developers.”