After six months of living with my mother I realised that unless I found her somewhere to live I was going to kill her!’ jokes Karen Margadant, whose 80-year-old mother had to move in with her after a stroke left her unable to live alone. Margadant makes light of the deteriorating relationship between mother and daughter, but it can be a very real problem when parents reach an age at which they need to be in a more secure environment.

And so Margadant discovered the world of retirement villages, where her mother could be independent but have medical care at her fingertips. ‘It was very important for her to have her independence and she found the idea of a "home" objectionable, which is true for most elderly people.’
The retirement village has replaced the old-age home, with property developers targeting increasingly younger retirees who wish to enjoy their latter years in secure environments that offer a variety of amenities. The developers are also seeing young people buying into villages as an investment where they can accommodate their parents and guarantee a place for themselves in the future.

There are a range of options available, varying from luxury retirement villages with every conceivable convenience to charitable organisations,

which manage well run complexes that cater for those with limited income. Within these are a range of ownership options such as sectional title, share block and life right which allow for different needs based on income, age and whether you expect a return on your investment.

June and her husband bought into a retirement village in the upmarket Gauteng suburb of Morningside when they were looking to downsize. For June, aged 63, the fact that it was in a retirement village had not been a priority when buying. Now that they are living there, they find they prefer being with people of a similar age. The social aspect is a big draw card for residents. ‘I can walk down the path and bump into people with similar interests; there are no wild parties or children running around,’ says June.

The fact that the complex is owned under sectional title is important as it means that the unit can be sold or left to her children. The two-bedroom unit was bought two years ago for R500 000; today a similar unit sells for just under R1-million.
Some units at the complex are owned by people whose parents have died but are too young to move in themselves – the age limit being 50 years old. They rent out the units until they can legitimately live in them.

Not all retirement villages offer round the clock nursing or frail care, and aim more at the able-bodied.

Sectional title with full frail-care facilities can be prohibitively expensive, with levies often more than double those at complexes that don’t offer it. Owners may find themselves subsidising a frail-care facility for 20 years and then still paying increased fees when they need to make use of it. Some frail-care units can cost up to R9 000 a month, which includes all meals and full-time nursing care.

Nellie van Staden of Nellie van Staden Properties has sold retirement villages for 25 years and has seen the fall-out from badly managed frail-care units. ‘You need to have at least 40 beds to make frail care economically sustainable. In many cases new developers make provision for 10 or so beds and then find a few years later that it is simply not viable and close them down.’

The buyers become the losers because, after paying a premium on the purchase price due to the frail-care facilities, their properties are now worth considerably less.

As a result of her experiences, Van Staden approached hospital group Netcare to develop a frail care component in retirement villages. Twenty months ago they formed Carenet, a division of Netcare, which manages frail care units for retirement villages. On the strength of this success Netcare developed three of its own retirement villages. Two in Olivedale, north western Johannesburg, called Olive Grove and Maison d’Olivier; and River Park on the Kwa-Zulu Natal North Coast, which is already sold out.

With levies ranging from just R600 to R1 200 for sectional title units, the model is likely to be very successful. Frail care still costs around R7 000 a month, but able-bodied residents will not be subsidising it.

There are success stories coming from complexes offered on a life right basis, too. Life right or, as it is sometimes referred to, tenancy right, effectively means that you stay in the village for life but on death or moving you only get back a portion of the value of your home. Unlike sectional title or share block – in which you own shares in the village rather than owning a single unit – with life right the unit cannot be bequeathed to children, nor can a child buy one for their parents with the intention of living there themselves. However, because the village makes money on the percentage of the sale of the unit they are able to more effectively support their frail-care centres.

The Flower Foundation, a non-profit organisation that offers accommodation for retired persons, has 16 different villages, all of which operate with tenancy right. In most cases the Foundation’s villages offer independent living as well as medium-care and frail-care facilities. This means that once living in the village, should you become unable to care for yourself, you will be able to move to the assisted-living area within the complex.

Marketing manager for the Flower Foundation Heather Withers says that contrary to what many people believe, in some cases tenancy right can be a good investment. When a unit is sold, either as a result of death or moving to frail care, 50% of the current value is returned. The value of cottages at Elm Park, one of the Flower Foundation’s premier lodges on the west of Johannesburg, has on average doubled every seven years. ‘This means that a resident effectively gets their money back after seven years, and after that they start to make a profit,’ says Withers.

Because of the tenancy right structure and the fact that it is a non-profit organisation, the levies at villages like Elm Park are reasonable. A two-bedroom unit valued at R500 000 attracts a levy of
R1 500, which includes a domestic worker once a week, a gardening service, on-site nursing staff, 24-hour emergency services as well as recreational facilities.

With the Elm Park waiting list currently sitting at 180 names, people may need to start thinking about retirement before their children’s school fees!

Frail care, though, is not any cheaper even at Elm Park, where the monthly levy of R8 254 includes 24-hour care and all meals. Although the Flower Foundation has a benevolence fund for people who are no longer able to meet the costs of the levy, they keep it to a minimum to avoid bankrupting the fund. Which is why children are usually asked to stand surety for their parents, in case they can no longer afford the services.

In Cape Town the charity organisation Cape Peninsula Organisation for the Aged (CPOA) offers a similar concept to the Flower Foundation and 14 of its retirement residences offer frail-care services. Both of these organisations rely on donations, gifts and volunteers, who provide a high standard of care.

On the other end of the scale is Oasis, a new development going up in Century City in Cape Town, which caters for those with cash to spare.

Property developer Marc Harries could not find a suitable place for his father when he was ready to retire. Harries found that anything that was vaguely decent was too far from the city. ‘Retired people don’t necessarily want to be shipped out to the countryside where they have never lived; they want to be near their social life,’ he says. So he grabbed the opportunity to develop a 450-unit sectional title complex on 5ha in Century City. It will offer a full health care centre with assisted-living apartments and frail-care facilities.

The development is envisaged, like its namesake, to be an oasis in the middle of the hustle and bustle of Cape Town. The brochure boasts an indoor heated swimming pool and solarium as well as a fully equipped gymnasium and wellness centre. Residents will be able to stroll 200m to Canal Walk and the Grand Canal along tree-lined boulevards.

What is quite obvious is that this is not for the hard up. It caters for the comfortably retired person with anything from
R795 000 to R3m to spend. Levies range from just under R2 000 a month to over
R4 000. Currently selling off plan, Harries says there is a greater demand for the R3m units which are possibly attracting the attention of those nomadic few fortunate enough to live half their year in South Africa and the rest in Europe but who want to spend their retirement permanently in the sun.

Investing in the future

Nellie van Staden clients are increasingly younger people buying a retirement home as an investment, which they rent out until they retire.

Marc Harries believes that retirement villages are among the best property investments around: first, there is a chronic shortage as a result of increasing demand as people live longer and move into these villages at earlier ages.

Second, Harries says that as a rule, body corporates at retirement villages don’t have debt as a result of unpaid levies. ‘Older people tend to be far better payers – they hate to owe money.’

Sectional title with frail-care facilities is considered by most to be the best investment. Almost everyone will need frail care at some stage, which cannot always be guaranteed if they are not already a resident at the village.

Sectional title means you have full ownership of a unit and when the time comes to move into frail care you have a capital investment you can sell to fund your frail-care levies.

New options

Horizons (pictured left) is a stylish retirement complex in Three Anchor Bay with nine floors and 32 apartments. With the option to buy or rent, a one-bedroom would sell for R650 000 while a two-bedroom fetches around R1.2-million. The building developed by Arthur Quinton is administered by the Cape Peninsula Organisation for Aged, who provide lunch time meals, cleaning staff and make sure that everything runs smoothly.

Mrs Gochin who is a member of the body corporate says: ‘CPOA provides us with frail care and convalescing or recovery as they have nursing staff.’ She adds that it is a lovely building to live in, but there have been complaints about repairs, which to date, she says, the developers have sought to ignore.

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