Retirement in 2020

The traditional concept of retirement has changed significantly over the past few decades, with many people in their 60s and 70s still very active and working.

While retirement generally represents a change in lifestyle, there is a growing tendency for younger people to plan ahead regarding retirement options and living conditions, ie:  downscaling from a large house once children move out, to a smaller more manageable home that will meet changing requirements as they retire and health amenities as they age.

Individuals looking at retirement options want the flexibility to allow them to enjoy life, with access to lifestyle activities ie: golf, gym, walks, as well as easy access to health and wellness services.  Mature lifestyle villages and estates for the over 50s’ are growing in popularity by offering these facilities, coupled with advanced security and lower maintenance costs.  A centrally located Estate, close to family and shops, with a lock up and go unit, will give the owners independence and peace of mind.

With the Covid era now on us, more people are also working from home as a result of the lockdown, and may continue to do so into retirement  so there would be other considerations to take into account such as a study or business center / meeting rooms.

There is also a growing awareness of an accommodation shortage aimed specifically towards the retirement sector of the market.  Developers are thus starting to develop various property “types” to address this demand.  According to Stats SA, it is estimated 9.1% of South Africas’ 60m population is over 60 years of age.

The value of retirement unit sales rose from just under R2billion in 2008 to R4.9 billion in 2019 and has risen on average 9.8% annually.  Translating these figures into units sold, roughly 3000 units were sold in 2010 rising to approximately 4400 in 2019 even with the real estate market slowdown from 2008.

Developers have therefore started developing sectional title units, freehold or full title aimed at the over 50s’, secure developments in good locations to cater for the high demand.  This individual is looking for investment options in property providing ownership and capital returns over time along with health, wellness and community amenities.

Sectional title ownership is seen as the easier retirement property option in that even though the Estate is managed by a Body Corporate with management and conduct rules, the majority of maintenance and security issues are taken care of by paying a monthly levy with the added bonus of common areas and community involvement.  Some purchasers will also still be eligible for bonds allowing them to put down a 10% deposit and pay the bond off over time – this is more pertinent to the younger purchasers looking at planning for the future and renting out the property until they are ready to retire or sell.  In today’s times, a couple in their 50s has potentially another 30-40 years ahead of them!  This translates into a real requirement for financial planning to ensure income over this period as well as the potential for capital growth from a full ownership property investment.

Buying sectional title or full title in a retirement estate also provides purchasers the flexibility to rent out or sell at any time, as opposed to life rights where there are long waiting lists and no capital appreciation or rental income potential.

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