Retirement Property Market In South Africa - Rising Demand For Property

South Africa’s formal retirement property market, accommodating 2% or 44 000 households in 650 retirement villages and properties, represents a small but significant segment of the country’s housing landscape.

The majority (98% or 2,8 million) of homeowners, older than 60, however lives in subsidised housing (46% or 1,3 million) or in non-retirement housing (52% or 1,5 million).

While most seniors currently reside in homes purchased earlier in life, the demand for purpose-built retirement communities is on the rise. This trend is driven by a growing senior population, changing lifestyle preferences, and increasing financial security among older adults.

According to Hayley Ivins-Downes (Lightstone), the data shows that, of the country’s 5.45m residential properties (excluding social housing), approximately one third is owned by people older 60 years. A quarter of these owners bought their properties after they turned 60, and just 44 000 of these properties are in formal retirement villages, which suggests they are targeted at the upper end of the market.

Lightstone has identified around 650 retirement complexes in South Africa - either Estates or Sectional Schemes - which use words like “retirement”, “old age”, “bejaard”, “aged”, or “outehuis” in their name.

Some 350 of the complexes are made up of properties registered at the Deeds Office (a total of 44k units), while around 300 entities are registered as one property at the Deeds Office but owned by, or allocated to, social services who manage units.

At most, these 650 entities account for less than an estimated 100 000 units and no more than 125 000 individuals, a small proportion of the over five million people who are 60 years of age or older.

Formally registered retirement properties

The 350 complexes containing units registered at the Deeds Office account for 44 000 properties, of which 33 000 are privately owned and 11 000 are owned by companies or trusts. These properties house anything between 44 000 to 88 000 people, assuming one or two people live in each property. More than half of the properties are valued at more than R1.5 million.

According to Ivins-Downes, the data clearly shows that while many South Africans over 60 own their homes, there’s a significant gap in the availability of formal retirement housing options. While Lightstone has identified around 650 retirement complexes, these only accommodate a small percentage of the senior population. This highlights the need for more diverse and accessible retirement housing solutions, particularly in the affordable segment. Additionally, approximately 13% of the stock was developed after 2020, and just more than 25% were built before 2000, with the balance being built in between.

Some 35%, or 15 000 properties, are in Estates (gated communities with a shared access/exit gate), and 65%, or 29 000, are in Sectional Schemes. Sales over the last five years A total of R29 billion has been spent on more than 15 000 properties at an average price of R1.9m in retirement complexes over the past five years (see four tables below). While sales have mostly occurred in Gauteng, Western Cape and KwaZulu-Natal, the Western Cape has had the highest average sales prices.