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Investors seeking solid long-term growth potential combined with exceptional tax efficiency get to enjoy the best of both with the Lucid Retirement Living Fund. Any investment made into this innovative Section 12J Fund before 30 June is 100% tax deductible in the year in which the investment is made. What’s more, the fund also offers a valuable built asset underpin as well as delivering potentially lucrative long-term returns from exposure to the premium retirement living sector.
Recent data provided by Statistics South Africa (StatsSA) reveals that, between 2002 and 2020, the average life expectancy of males in South Africa increased from 59.9 years to 64.6 years, and for females from 67.2 to 71.3 years.
In fact, StatsSA 2020 mid-year population estimates show that the total population of persons aged 60 years and older has been increasing steadily, and more rapidly, since 2015. With the result that, in 2020, the elderly population of South Africa was estimated to be over 5.4 million, thereby making up 9.1% of the overall population of the country.
These figures tell us a number of things. The first is that the conditions that allow people to live longer in SA, like healthcare, medical advances, and healthier lifestyles, are improving and will continue to give rise to an ever increasing elderly population. In fact, population pyramids informed by the United Nations project that by 2040, there will be over 8,7 million South Africans over 60 years old.
Secondly, South Africa has an increasing responsibility to look after its growing elderly population and provide them with the aged living and care facilities they need. Government is acutely aware of this responsibility and has included the elderly support imperative in numerous policies, most notably the National Development Plan.
And thirdly, elderly living facilities are set to become a prime investment opportunity, provided they are designed and built in such a way as to offer a compelling lifestyle proposition for their prospective owners and occupants, and they are correctly funded and expertly managed in order to deliver maximum sustainable value for all their stakeholders, including those who invest in them.
This market for quality retirement living opportunities is already evident amongst affluent individuals in the Northern suburbs of Johannesburg, where many prospective retirees are finding themselves at the bottom of waiting lists of two or more years to secure decent post-retirement accommodation.
Gidon Novick, founder and CEO of innovative venture capital firm, Lucid Ventures, explains that an understanding of these key considerations, and the investment opportunity that can be created by aligning them, is what first led to the establishment of the Lucid Retirement Living Fund.
“While it was established as a Section12J vehicle, and it still offers tax breaks to anyone who invests before the end of June 2021, we recognised the imperative to design the Lucid Retirement Living Fund in a way that delivers sustainable investor value far beyond the generous tax benefits that the 12J structure offers,” Novick explains, “and based on our insights into SA’s aging population, we identified premium retirement living and care as an excellent growth sector with the potential to provide highly sustainable long-term investment returns – provided it is done right.”
And Novick explains that because this underlying recognition of the need to ‘do retirement living right’ is at the heart of the Lucid Retirement Living Fund, the investment potential of the fund is significantly amplified, and will likely grow steadily over time.
He says the Lucid team recognised from the outset that in order to ensure their fund was the valuable investment opportunity they believed it could be, it had to include two non-negotiable components; namely a quality asset underpin, and a hospitality driven retirement lifestyle offering that would become the benchmark of innovation and excellence for what can only be considered a tired and uninspiring industry at present.
To deliver both, Novick put together an enviable team of investment, design, construction and facilities management experts to create and run the upmarket retirement living assets underpinning the fund. Two pieces of prime real estate have also already been acquired for the initial developments in Houghton and Rosebank, Johannesburg.
According to Corene Breedt, who co-heads the operations aspect of the fund, the focus on creating a retirement living experience built on hospitality, lifetime ownership in well-located facilities, and personal choice not only elevates the Lucid Retirement Living offering way above industry norms, but means that demand for the units on offer is unlikely to ever diminish – both of which translate to significant potential for resilient investment returns.
“The Lucid Retirement Living experience is going to be vastly different from anything retirees have come to expect,” Breedt explains, “not only does it offer residents an apartment for life – even when they require frail care – but those apartments, and the lifestyles they provide access to, have the in-built flexibility to adapt to the changing needs and desires of residents as they progress through their golden years.”
Novick is confident that this thoughtful, experience-driven design will drive an unprecedented level of demand for the Lucid Retirement Living units, that will not only ensure the value of the two initial developments, but provide the momentum needed to rapidly expand the offering across the country – which will exponentially increase value for early investors in the fund.
A rapidly aging population means there will always be increasing numbers of South Africans retiring, so this is literally a captive market. And since there is currently very little supply to meet this growing demand for quality retirement living spaces, the Lucid Retirement Living Fund is an opportunity for sustainable growth and income, at relatively low risk, that Novick says no discerning investor should miss.
“And since an investment in this fund before 30 June 2021 still allows the investor to benefit from the generous tax deductions provided by the Section 12J structure, there’s no better time than right now to lock in the growth and tax saving benefits of the Lucid Retirement Living Fund.”
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