SA Could Be Home From Home for Wealthy Retirees

WITH the number of retired people throughout the world increasing significantly, there are huge opportunities for the South African listed property sector and institutions to offer foreign-pooled investments access to the local market, says Colin Young, head of asset management at the Old Mutual Property Group.

Young, who was speaking at the fourth annual property investment conference hosted by commercial property association Sapoa and Investment Property Databank, in Cape Town last week, said there could "no longer be the excuse that there is not enough capital" for investment in the South African market.

Young says there is enough capital worldwide for investment in the South African market and that the main challenge would rather be to find the property assets for this capital.

"Capital will not be the constraint for growth of real estate. Real estate is standing at a precipice of a wave of newly retired wealth needing annuity products," he says.

Young says annuity products are those that generate monthly cash.

"There are very few of them which are cash, bonds and property."

Young says mankind is entering the "silver century" and that it will be world's most defining demographic trend.

He says the baby boomers have started retiring in the US this year and those aged 65 and older will make up 15% of developed countries' inhabitants.

Young says fertility rates are also changing with births only just equal to deaths in the US.

In Europe and Japan, deaths have outnumbered births for a quarter of a century already.

By early this year, for the first time in history, the number of 60 year olds in the world will have surpassed the number of under-fives.

Young says people are also taking retirement earlier, and spending longer in retirement, because of the rise in life expectancy.

"So an increasing proportion of the world's wealth will be held by the retired population. They need an income in retirement. Real estate can be a solution."

Young says that over the next decade, real estate has the opportunity to provide a solution. The challenge is to increase the size of the investable real estate sector.


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