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Investors look to tee up golf course deals

JUST as the challenge of golf has captured the imagination of millions around the globe, the opportunity to make millions of dollars from golf course development also presents a challenge to many in the business world.

With up to six per cent of all Australian golf courses for sale at any one time, many keen investors also have been drawn in to the game.

In some respects, golf courses today have become less about the sport and more about real estate, with courses now seen by developers as an attraction to potential residents and a prime opportunity to boost the sale price of surrounding land.

“It often goes that golf courses do struggle, but they add value to surrounding land and that makes them feasible,” Knight Frank associate director Barry Toms said.

“Golf courses are really an attraction to residents in the area ... a kind of centrepiece to an estate.”

If there was no feature to an estate, such as a golf course, land sales were usually quite slow, Mr Toms said.

Colliers Jardine commercial, investment and retail sales director Jeff Braddock agreed, and said golf courses, which 20 years ago were not built with real estate in mind, were increasingly built and owned by land developers.

“The dollars are really in the residential land and golf courses simply enhance that,” Mr Braddock said.

Three golf courses are up for sale in the State’s South West, with all either part of a real estate or resort development.

The Sanctuary Golf Resort in Bunbury incorporates an 18-hole golf course and pro-shop, clubhouse, tavern and bistro and conference areas.

In addition, the management rights to 38 established short-stay accommodation units within the resort are up for sale, along with the right to develop a further 47 units.

The Dunsborough Lakes Golf Course and residential development takes in an 18-hole golf course, a 6ha resort site with approval for 115 villas, 139 hotel rooms and resort facilities, and 108ha of land approved for residential development.

Both of these courses, previously for sale through Knight Frank, are now under offer.

The Preston Beach Golf Resort, located 25 minutes from Mandurah, is also on the market, through Colliers Jardine.

The resort has approval for an 18-hole course, of which only the first half has been built, 100 hotel rooms, 50 resort villas, a six unit multi-residential site and 402 residential blocks which will border the course.

“People will be attracted to this because it offers a certain lifestyle,” Mr Braddock said.

But a golf course development must be managed very carefully, as it could all too easily go wrong, according to Golf World Management executive chairman and chief executive officer Stephen Allen.

“There have been some companies who have been very successful in residential real estate that have not been successful when it came to golf courses,” Mr Allen said.

“Port Bouvard is an example of a golf estate built the right way around. The golf course was built after, to complement and enhance the lifestyle of the people already living there.

“They were able to gauge the lifestyle and spending of the people living there by the amount they spent on their houses, and then they set the prices according to that.”

Mr Allen, whose company works on the development, acquisition and management of golf courses around the globe, said he had a 128-point checklist that he sent out to clients thinking about developing or buying a golf course.

“At the top of the list is demographics. You need to think about how affluent the nearby residents are or will be,” he said.

“Timing is also crucially important … a good golf course takes time to mature.

“And you need real experts to run the course. Good management can make or break a successful course.”

The best courses also were the most pristine and the most interesting, Mr Allen said.

“It costs about $1 million a year to keep a golf course in pristine condition. You can spend only $250,000 maintaining a course, but then people will not want to play there,” he said.

“I would rank Karrinyup, Araluen, Joondalup and The Vines as the top four golf course in the State, but that will differ from person to person depending on what type of courses they like.”

And while not a standard investment, golf course investment opportunities are becoming more common.

“At any one time up to six per cent of all the 7500 golf courses in Australia are available, either officially or unofficially,” Mr Allen said.

“But there are some that I wouldn’t touch at all.”

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