Is the mature housing market f

Is the mature housing market for you?

Retirement property seems to not be able to keep up with the number of senior citizens as retirement property comprises only a small portion of South Africa’s housing stock.

Is the mature housing market f

The elderly population of South Africa in need of retirement care homes is growing year on year. According to Statistics SA’s mid-2018 report, those aged 60 and over make up 8.5% of the population.

With this gap in the ‘mature’ housing market and the demand for quality accommodation among the growing numbers of middle to upper-income retirees is swiftly outstripping supply, developers, investors, and even JSE-listed companies are appearing to show more interest in the retirement properties market than they might have had in the past. Aside from offering outstanding lifestyles for retirees, retirement properties in estates have also become an attractive investment proposition, even for younger buyers.

Quality retirement properties not only offer increased independence and outstanding lifestyle but also often satisfy the investment requirements of both young and old.

The benefits of investing in retirement homes

The picturesque areas and surroundings that come with retirement villages and old age homes in towns or regions popular with an older clientele are enough to attract potential retirees. You will be able to promise your residents tranquil surroundings and a slower pace of life assuring great lifestyle benefits.

More and more retirees are discovering the benefits of downsizing and distributing their wealth to ensure that their family gets as much of their equity as possible. They would invest in a unit in a retirement village and perhaps take some time to move in, so if they decide not to occupy the space the rental yield could help cover their expenses elsewhere, working as a good financial incentive for a buyer.

Retirement villages and old age homes are also a hands-off investment with strong rental projections. You can get a management company to see to the running of your investment. The benefit of having a management company in place to oversee the day-to-day running of the care home is that it makes for a completely hands-off investment.

Read: How wise is investing in student accommodation?

What to look out for

When it comes to retirement villages and old age homes, these are usually confined to typical retirement towns or villages, making the locations limited. This sometimes makes it hard to find tenants as sometimes retirees would like to be located closer to their families and if these limited locations see a retiree moved further from their families, then moving into a retirement village could be seen as undesirable.

Although having a management company run your retirement village has its upside, it also has a downside: the management fees that are incurred. These fees reduce the overall rental yield. Fortunately, the yield is still high because of the strong demand, but it is constrained by these additional costs.

Another thing to be aware of is the limited market. Retirement homes are sometimes limited to 50-year-olds and over, and with South Africa’s older residents only making up less than 25% (Stats SA, 2015) of the population, there could be a small pool of potential buyers, so it is worth being cautious.

Investing in a retirement village or an old age home comes with both its advantages and disadvantages, so you would have to do some research to make an informed decision about investing in the ‘mature’ housing market.

Whether you are looking to purchase a home to enjoy your retirement years in or just wanting to sell your bigger home to downscale, PropertyFox will make sure the sale goes as smoothly as possible.

PropertyFox is South Africa’s leading smart real estate agent: Striving to do things differently and providing excellent customer service through sharing information openly and honestly to ensure their clients are always in the know.

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