Pic credit: The swimming pool at the show village of Steyn City in Midrand
WORDS: KIM MAXWELL :: PHOTOS: SUPPLIED
In 2014, PWC released a report called Real Estate 2020: Building The Future. It projected that middle classes would grow by 180% between 2010 and 2040 and that cities, especially in emerging market countries, would attract younger middle classes. “As intense competition for space increases urban density, apartments are likely to shrink. Developers will need to become more innovative about how they use space,” the report said. It also predicted that by 2050 demographic shifts would affect demand for real estate fundamentally, with middle-class urban populations in Asia, Africa and South America needing far more housing.
A prediction that has materialised in 2020 was that “advanced economies’ ageing populations will demand specialist types of real estate, while their requirements for family homes will moderate”.
The PWC report also forecast that significant older population growth would result in subsectors of real estate emerging: new “significant subsectors in their own right” would include retirement and healthcare – trends we are certainly seeing currently.
Picking up on this in 2020, HomeFront researched the impact of buying trends of two significant generations – Generation Z (aged 18 to 25) and soon-to-retire baby boomers (aged 56 to 75) – on the local property market. What are these groups buying, how do they approach property decisions and how do their life stages influence their wish lists of home specs?
While not all of PWC’s projections played out, one was spot-on: “Shifting demographic trends are likely to create a huge need for new and different real estate by 2020 and beyond. Residential real estate will become more specialised, with local and cultural differences influencing how this evolves. For example, city apartments for young professionals may be smaller, without kitchens or car parks; there’s likely to be a range of retirement accommodation for the elderly; and families in some emerging economies might well live in gated communities outside the city centres.”
Steyn City Parkland Residence is an excellent example of a large gated community that sprung up in the “new north” between Johannesburg and Pretoria. The estate is home to a range of ages, but its retiree population fits the specs of a higher-income, active resident who tends to “refire” rather than retire after 60.
“Most of our retired buyers opt for cluster homes because of the lock-up-and-go lifestyle. Most are moving from larger homes and looking to declutter their lives in every area, so they want a simple home with less need for maintenance,” says Steyn City marketing and events group head Zoe van Onselen.
“Security is paramount for this group and Steyn City is known for its highly advanced security measures.”
This estate offers two cluster developments: 65 on Park, where baby boomers make up about 30% of buyers, and Origin, where the figure is about 25%. At Oasis apartments, 12% of the owners are baby boomers. It’s a demographic group that enjoys travelling, and the cluster or apartment lifestyle allows for this.
Aside from 13,416 millennials, the Deloitte Global Millennial Survey 2019 also gauged responses from 3,009 Gen Z-ers in 10 countries. It found that these young people value experiences, but more than half want to earn high salaries and build wealth too. Priorities have shifted: for 57% of Gen Z-ers, travel topped their list of aspirations, whereas 49% said they also want to own a home.
However, financial constraints are an issue for many. “It’s all about affordability. We offer a turnkey solution for millennials and Gen Z-ers. You don’t pay until you stay. So you only start paying the bond once you move in,” says Multi Spectrum Property marketing representative Francois van Staden, referring to the apartments offered at BuhRein Estate in Cape Town. Its location in the metropolitan’s outlying Northern Suburbs keeps prices lower.
You only need a minimal securing deposit upfront for the turnkey solution,” he says. “If you’re a millennial, it can take two years or more in the normal residential market to save for a deposit.
Renting is not a solution because you’re paying somebody else’s bond.” Buh-Rein’s younger buyers generally opt for modern two-bedroom apartments in Blue Lily Lane as first-timers. “It’s always better to buy directly from a developer because most costs are included in the purchase price,” says Van Staden.
Sweetening the deal is MSP’s offer to first-time owners of a five-year guarantee on structural defects, with a retention period, and a plumbing and electrical guarantee. Its current special gives buyers R65,000 in rental assistance on a two-bedroom Blue Lily Lane unit that sells from R1,159,900, with no transfer duty.
In Johannesburg, Balwin Properties finds a market for price-conscious Z-ers in secure complexes with amenities, such as The Amsterdam in Randburg. “Clients are looking to be as close to work as possible but get the best value for money. A lot of centrally located developments are extremely pricey for small apartments. The Amsterdam hits this nail on the head with big apartments, correctly priced and close to major CBDs,” says Balwin property executive Jason Heywood. Prices for a two-bedroom start from R1,199,900.
A number of Z-ers still rent with friends or curtail costs by living with their parents. Pam Golding Properties Southern Suburbs branch manager Samantha Nel says the agency has sold only two units to buyers younger than 25 – both in Observatory in Cape Town. Recently an apartment sold to a 27-year-old who paid R1.37m for a one-bedroom.
At Obs Court, a sectional title unit development in this suburb, two-bedroom units sell from R1.75m to R2.1m. “Most Gen Z-ers prefer central locations but millennials are definitely moving further out to suburban locations to get more for their money,” says Balwin property executive Michelle Blackburn. Its Ballito Hills development targets both these groups and is centrally located within 35km from Umhlanga, with easy airport access. One-bedroom apartments start from R1,074,900.
Added value is a big deal for these buyers. “All appliances are included – it’s easy to just move in and enjoy savings of additional costs in your first home,”
Blackburn says. “Fantastic amenities on your doorstep include a restaurant, a pool, a gym and a spa. These are covered by your levies and therefore cost-effective.”
Convenience is just as important. “This generation is all about instant access, so the fact that you can participate in your favourite sport or exercise without leaving the residence is a major plus,” says Van Onselen. “Our 800ha of indigenous parkland are ideal for trail running or mountain biking. Steyn City hosted the Discovery 947 Ride Joburg MTB Ride in 2019 and offers residents a 40km blue-graded route.”
“Generation Z is all about instant access, so the fact that you can participate in your favourite sport or exercise without leaving the residence is a major plus” Zoe van Onselen, marketing and events group head, Steyn City
- Just more than 13,000 Gen Z-ers are active in the local property market (in their own right, not via inheritance).
- R890,000 is the average current market value of these properties, with an average of R750,000 for freehold and R970,000 for sectional title. A small proportion buy in estates valued from R1.1m to R1.8m.
- There is substantially more freehold than sectional title stock in SA. While only 15% of national stock is sectional title, 35% of Gen Z homeowners own sectional title property, showing a strong preference for sectional title living.
What are baby boomers looking for? “They’re buying for lifestyle, safety and a great environment for walking, on a golf course estate,” says Tricolt CEO Tim Kloeck, referring to Serengeti Golf and Wildlife Estate homeowners. This estate is quite a way out of urban centres, on the R21 between Pretoria and OR Tambo International Airport.
More centrally, Tree Tops Houghton apartments are a good example of a sectional title development that delivers lock-up-and-go ease for Boomers. “People buy here more as an investment, but we have a few retiree residents. They love the Rosebank area, with friends and all their favourite restaurants close by.
They want to downscale but in the area,” says Kloeck. “The freehold house market in Joburg is dead. People want safety over everything, so estates are the way.”
Seeff cites recent Lightstone demographic data showing “a clear demographic shift” in Somerset West. While 70% of current owners are older than 50, 57% of new buyers are younger than 50.
Louise Varga, Pam Golding Properties branch manager for Stellenbosch, Somerset West and Strand, says mostly Boomers buy in this region. In Somerset West, 50- to 65-year-olds make 27% of all purchases; in Stellenbosch they comprise 31% of purchases. “They are definitely diversifying their specifications.
Lifestyle estates are becoming very popular. They are also opting not to spend all their resources on one, single property,” she says.
“They’re looking for security estates and homes on smaller erven of 400m² to 800m² that are water-efficient with low-maintenance gardens. These should have high-spec finishes and fibre. They are typically three-bedroom homes with a study and a double garage.”
And do millennials and Z-ers go about their purchasing in a different way compared with baby boomers? Technology definitely plays a part, according to Heywood. “These younger clients tend to do their research online and normally look at one- and two-bedroom apartments to live in. In a few years when they have greater earning potential, they would let the apartment and buy a bigger property to meet their needs.”
“Baby boomers are definitely diversifying their specifications. Lifestyle estates are becoming very popular” Louise Varga, branch manager for Stellenbosch, Somerset West and Strand, Pam Golding Properties
- There are 2.1-million baby boomers active in the property market – but only 22% have transacted since turning 56 (so 78% still live in a property owned prior to their 56th birthday).
- R1.125m is the average current market value of these properties. This data is limited to the 22% who bought as they approached retirement (or during the process). Of those, 13% bought within an estate. Average values are R890,000 for freehold, R1.2m for sectional title outside estates; R1.7m to R2.5m for estates.
- With more freehold than sectional title stock in SA, it’s no surprise that the bulk of retirement-buying baby boomers bought freehold. While only 15% of national stock is sectional title, 21% of retirement-buying baby boomers own sectional title. They show a stronger preference for sectional title than the general population, but not as strong as Gen Z-ers.
Source: Cindy Beets, PR and marketing head, Lightstone Property