Time to buy limited as demand soars

Time to buy limited as demand soars

Category Property News

Desire for retirement property in False Bay surges as upcountry buyers.come to the party THE FALSE Bay coastline is becoming increasingly popular with upcountry buyers who are drawn by its lifestyle, good value and variety of property options available to families, but retired people looking for ageappropriate lifestyle developments are faced with progressively limited options along this scenic strip. This is according to Steve Thomas, franchise manager for Lew Geffen Sotheby's International Realty in False Bay and Noordhoek, who says developers have begun to realise the value in the market, resulting in three new retirement developments going up in the past five years. However, demand is outweighing supply as Cape Town's lifestyle offering and strong property market continue to attract investors. "Interestingly lifestyle is not the primary reason most upcountry investors offer for buying their retirement homes well before they need them. Most are trying to beat the Western Cape's property price inflation while they can still afford to enter the market. Many then let their properties long term to subsidise their bonds, or take shorter lets and use their properties for holidays. "There are only a handful of purposebuilt retirement developments in False Bay but not all offer frail care facilities, which is a distinct drawback as many retired people are understandably reluctant to have to move again should the need arise for additional care." Thomas says he is also seeing a trend of a surge in demand for retirement accommodation for people under 60. "The modern lifestyle retirement village concept is very different to traditional old age homes that offered little more than a room, a.communal lounge and three square meals a day ".61. growing number of emptynesters nearing retirement no longer want the responsibility of large houses and prefer to move just once after the children have left the family home rather than downsize and move again a couple of years later. "Modern retirement villages are based on the precept of offering a quality lifestyle in a secure.community for mature people who are still active, with many accepting residents from the age of 55 or even 50 in some cases." Thomas says that many buyers are beginning to recognise the longterm value of these developments and the benefits of investing in their retirement homes a substantial time before they need them. "The main advantages are twofold; there is the peace of mind of knowing that your retirement planning is in place and that you're investing at current market prices a distinct advantage for anyone considering buying property in Cape Town, where demand is unlikely to wane in the.coming years and the affordability threshold will rise correspondingly" Lew Geffen, chairman of Lew Geffen Sotheby's international Realty, says: "Local demand is also rising exponentially with many prospective buyers remarking on the very limited choice of affordable options available to them as prices generally start at around R2.3m. "In addition to dwindling stock spurred by the influx of upcountry buyers, rising inflation in recent years has significantly shrunk the value of retirement investments while, conversely, property prices in the Western Cape have risen steeply during the same period." Geffen says that another.compounding factor is that the window for improving the demand/supply ratio is closing because, like most areas in Cape Town, False Bay is fast running out of greenfield development space. "Building an upmarket yet affordable lifestyle retirement development requires a fairly large tract of suitable land in a soughtafter area at a reasonable price, otherwise the unit costs will become prohibitive, out of kilter with the area's property values and out of the range of many buyers. It's also far more difficult to finance properties that lending institutions consider overvalued." Thomas says many retirement developments sell their units on a life rights scheme and it's critical that investors understand how it differs from sectional title or full title ownership. "Even though a sale takes place, there is no purchase or transfer of property Instead, buyers purchase the right to live in a specific unit for the rest of their lives while the ownership is retained by the development. "The immediate financial advantage is that there are no transfer duties or registration fees payable, but the property itself does not become an asset and therefore cannot be bequeathed to heirs. Upon resale, the outgoing residents (or their estate) will receive a percentage of the marketrelated resale price, which is usually determined by the number of years they occupied the unit." Geffen says: "False Bay has many appeal factors and demand for retirement accommodation will continue to grow In addition to its established infrastructure, clement weather and natural beauty, the area is also far less congested than its coastal counterparts closer to the city"

Author: Lew Geffen Sotheby's International Realty