The retirement living sector, long overlooked by local real estate players, is emerging as a mainstream asset class, increasingly attracting institutional capital. That much is clear from this week’s launch of the V&A Waterfront’s first dedicated residential offering aimed at well-heeled boomers.
The Bower, a purpose-built life rights development, is under construction alongside the InterContinental Table Bay Cape Town hotel in the Granger Bay precinct, near the Victoria Wharf shopping centre. It offers 147 one-, two- and three-bedroom apartments, leisure amenities and a nursing and dementia care centre.
The V&A, which is valued at R24.8bn and co-owned by JSE-listed heavyweight Growthpoint Properties and the Public Investment Corp, is one of South Africa’s most desirable live, work, shop and play precincts. It gets 25-million visitors a year.
The introduction of a luxury “later living’’ community at the V&A, as the developers have coined it, signals a broader trend of smart money taking a punt on retirement housing, as we see lifespans in some sectors of the population getting longer and more active. Housing developments aimed at pensioners are a well-established and popular income-generating investment among real estate investment trusts (Reits) in the UK and US. However, in South Africa these are still widely regarded as an alternative subsector.
In fact, only Growthpoint, which owns a R155bn portfolio of mostly retail, office and industrial buildings across South Africa, Australia and Eastern Europe, has any real exposure to retirement housing among the JSE’s Reits.
It entered the sector in October last year when it bought the R2.4bn property portfolio and operations of senior living developer Auria through its unlisted health-care property fund. The latter’s portfolio, which includes hospitals, medical suites and pharmaceutical manufacturing and warehousing facilities worth R8bn, is managed by Growthpoint Investment Partners.
Huge growth potential
Auria owns four senior living villages: San Sereno in Bryanston, Melrose Manor in Melrose and Royal View on the Royal Johannesburg & Kensington Golf Club in Sandringham and Woodside Village in Rondebosch, Cape Town. A fifth development, Coral Cove, is under construction at Sheffield Beach on the KwaZulu-Natal north coast. Auria’s business model is aimed at the higher LSM over-60s market, a sector believed to offer huge growth potential.
V&A Waterfront CEO Graham Wood says The Bower is a response to strong demand for an upscale, hospitality-led product on the Atlantic seaboard. It has price tags to match. One-bedroom units start from R9m. A three-bedroom sea-facing penthouse will set you back R40m.
Wood says that unlike traditional retirement villages, The Bower is a “boutique” offering that supports a more contemporary approach to how people spend their later years. The focus is on “ageing in place’’, which refers to a shift away from the model where retirees supposedly relocate to cookie-cutter care homes in platteland areas, often far from family and familiar surrounds.
In contrast, Wood maintains that The Bower allows residents to remain independent and socially connected with access to care as their needs change, without having to leave their communities.
Plush
The V-shaped development is being built around a communal garden and offers plush amenities including private-chef dining, a yoga studio and gym, private cinema, library lounge, lifestyle manager and concierge support.
It’s been designed by New York-based architectural firm Kohn Pedersen Fox, whose portfolio includes landmarks such as One Vanderbilt in New York City, Hudson Yards in Manhattan and Shanghai World Financial Center. Occupation is expected in February 2028.
It will be interesting to see how quickly units in The Bower sell, but a post-pandemic surge in residential property prices in the broader V&A precinct suggests there won’t be a shortage of demand.
Ross Levin, licensee for Seeff Atlantic Seaboard, tells the FM that buyer interest for V&A apartments has rocketed in the past two years, pushing prices ever higher. The group has already clinched eight apartment sales at the V&A this year, five of which fetched more than R20m.
That includes a R45.4m sale in the Palgrave building and another R46m deal in Pembroke, both to local buyers. Referring to data from PropStats, Levin says in the past five years the average price paid for an apartment at the V&A has climbed 56%, from R12.94m to R20.2m.
