Challenges to retirement housing

What does the future hold for the industry in South Africa?

Rob Jones

RETIREMENT

Common Ground?

Retirement refined

• The action of changing pace, from one set ofactivities (both economic and otherwise) toanother set of activities more in keeping withones age and one’s need to generate amonthly income.

• While ideally a voluntary action, retirementis often induced by personal wealth, health,law, societal rules, norms and other factors –(not always a bad thing).

Retirement Risk

While many factors contribute toward a fulfilling retirement, none impacts it so greatly as the location

of ones choice of a last home and the related environment and services.

Retirement Intelligence

• Expo workshop• Promotors

• Detractors

• Application of this information on the action of purchasing a home in a retirement village.

Promoters of a great retirement

• Financial planning

• Health and nutrition

• Relationship management

• Spiritual and emotional wellbeing

• Technology

• Physical exercise

• Hobbies and activities

Detractors from a great retirement

• Disorganised

• Resist change

• Stress management

• Insular lifestyle

• Uninformed

• Poor communication

• Bad attitudes

Application –> Retirement Housing

• Freehold

• Sectional Title

• Life Right

• Rental

• Suburbs

• Estates

• Levy stabilisation

• Services

• Etc….

RETIREMENTINDUSTRY

Common Ground?

• What is the “Retirement Housing Industry”• Very broad range of accommodation and services to those entering “Retirement”

• Who are the stakeholders?• Retirees• Developers• Banks• Insurers• Owners• Operators• Direct investors (Life Right Schemes)• Educational institutions• NGOs• Medical / Healthcare• Caring and Companionship• Legal• Catering• Security• Gardens and Landscaping• Energy innovators• Government

What differentiates the stakeholders?Commitment

• Long-term• Medium term• Short-term

CommitmentLONG (multiple generations) MEDIUM (One generation) SHORT (<1 generation)

Government

Retirees

Owners

Operators

Direct investors (Life Right Schemes)

Developers

NGOs

Banks

Insurers

Medical / Healthcare

Engineers

Architects

Construction companies

Educational institutions

Caring and Companionship

Lawyers

Caterers

Security

Gardens and Landscaping

Energy innovators

Why is commitment important?

What increases commitment?

Global Challenges

• Dementia

• Affordability of care• Technology

• Law

• Changing demands from clients (we are ~10+ years into the so-called “baby-boomer” period)• Flexibility

• Transparency

• Technology

LOCAL

Pockets of operational excellence

• Management & administration

• Care

• Housing

• Catering

• Security

• Landscaping

• Entertainment

• Education

• Spiritual wellbeing

Gross Generalisations (Operations)

• Care workers are inadequately catered for and care is too expensive for the wrong reasons.

• Housing is replete with fly-by-nights and incomplete villages

• Catering leaves much to be desired in most villages and there is a lack of wellness thinking

• Security is too large a portion of most village budgets• Entertainment is lacklustre and sometimes insulting• Access to adult education is almost non-existent• There is no professional management qualification• Residents are obsessed with developer-bashing

Pockets of strategic excellence

• Home based care

• Staffing models

• Life right models

• Dementia care

• Investment

• Financing

• Group schemes

• Village formats

Gross Generalisations (Strategy)

• No clear direction for affordable care (not medical care)

• No proper minimum standards for Retirement Village developments

• No minimum standards for operation of villages

• No insurance for dementia or even aged care

• No industry association

• No agreed measures of excellence

• No benchmarking services

Local Challenges – 4 categories

1. Organisational

2. Regulatory

3. Cultural

4. Financial

1. Organisational

• Fragmentation• Retirement Communities World Africa 2011

• Specialisation/silos• Unwillingness to share best practises?• Rivalry?• Lots of little NGOs• No central coordinating body

• Failed attempts – funding (SARVA - 2011)• Shire• Flower Foundation• CPOA• PADCA

2. Regulatory

• First-world building codes

• Outdated and incomplete law• HDSRP Act• Older Persons Act

• Standards?

• Benchmarks?

• Codes of conduct?

• Excellent international examples• E.g. New Zealand• RSA unique?

• Will we wait for government to regulate us again?

Lifemark, NZ

CFC, NZ

3. Cultural

• Resistance from “family culture” groups

• International experience?• China

• Previously taboo• 1-child families / no cousins / role of elders• Hong Kong conference 2011• Delegations to Western Cape• >50% in Shanghai are “empty nesters” (2014)• http://www.china.org.cn/english/MATERIAL/76806.htm• Retirement Age (50/60 since 1950) – changing in 2017 3m/y?

• Prosperity gives rise to changes in culture

• Growth of the African middle class

• Are we researching, designing, building and marketing correctly?

3. Cultural – China

http://www.forbes.com/sites/gordonchang/2014/02/09/should-we-put-granny-in-a-nursing-home-in-china/#28abd692ef62

3. Cultural – Africa

http://www.uhy.com/the-worlds-fastest-growing-middle-class/

4. Financial

• Welfare burden growing• Financing for new economic developments scarce• Financing for new welfare developments non-existent• Government grants ?• South Africa ranked 130/150 in survey of most

desirable retirement spots.• http://businesstech.co.za/news/international/80169/so

uth-africa-among-the-worst-countries-for-retirement/• Material well-being• Health• Finances• Quality of life

GLOBAL OPINION

Industry Response?

• Who speaks for us?

• Who comments on surveys like the GRI and translates it for our clients?

• Who lobbies with government?

• Who drafts laws for us?

• Who standardises contracts?

• Who sets standards, measures and benchmarks?

• Who protects our clients?

• Who protects the operator from unreasonable clients?

• Where is our ombudsman?

What does the future hold?

The leading edge of economically-active black SouthAfricans that are likely to seek a lifestyle in keepingwith what they are used to at retirement will start toincrease rapidly from 1995+25 years – 2020 to 2030will see those who were between 30 and 40 in 1994and who were best placed to take advantage ofempowerment policies that provided a boost toincome and an opportunity to grow a reasonablepension.

Who will house them?

Imperatives

The industry must:• Form – identity, membership, ownership, commitment• Normalise – set standards, measurements and methods• Communicate – formally, informally• Organise – geographic? Discipline?• Prioritise – National and regional• fund common priorities - Expo, Trade Conference• Measure – increase discipline, improve continuously• Rate – rank within types?• Report – transparency

In summary

• I believe that the retirement industry has much to offer SouthAfrica and in an ideal world could set an example in manyareas:• Industry cooperation• Formulation of law and regulatory frameworks• Energy consciousness• National benchmarking• Mutual respect both within the industry and between South Africans• Embracing “differently-abled” people• Reconciliation

• I believe that the industry should commit itself to cooperationand self-regulation before others force legislation that isinappropriate and not well thought through.

THANKS

• DEVELOPMENT• SALES & MARKETING• OPERATIONS• TRAINING & WORKSHOPS