The romance between golf and real estate in Western Australia might be nearly over.
The romance between golf and real estate in Western Australia might be nearly over.
Has the golf estate come full circle?
As property developer Peet starts the promotion of its latest land release, Yanchep Golf Estate, it will be completing a small part of the vision of entrepreneur Alan Bond, who was not just a pioneer of the area he dubbed Sun City but the local version of the country club linked with land sales.
Peet plans to sell nearly 1,500 lots on a 151-hectare parcel of land that follows the contours of the eastern perimeter of Sun City Country Club, the member-owned club which Mr Bond developed in the early 1970s.
The golf course was part of a package of attractions – including racing the America’s Cup off that part of the coast, a marina at Two Rocks and a theme park – that he hoped would be the catalyst to the development of a satellite city on a more than 8,000ha parcel of land he owned.
In fact, golf was such a central theme to the original development the whole site was going to be called St Andrews after the Scottish home of the land-hungry sport.
In the intervening four decades, several golf estates with a real estate focus have been developed and, in many cases, subsequently enveloped by Perth’s rapid urban sprawl.
The Vines in the Swan Valley, Joondalup Country Club and Meadow Springs, near Mandurah, were all established in the 1980s.
Others to follow with various levels of success were Secret Harbour, Araluen, Port Kennedy, Dunsborough Lakes and Binningup in the 1990s and The Cut at Port Bouvard as late as 2005.
Purpose-built developments are not the only golfing connection to land releases.
Wanneroo City-owned Carramar Golf Course, for instance, has attracted developers like Peet to its fringes and, in recent times, Lake Karrinyup Country Club has sold off excess land to residential development.
Cockburn Council even thought about making a golf course part of developer contributions when they sought approval for subdivision.
But the pace of these developments has slowed, and many question whether new developments will be viable.
Land costs, environmental challenges, ever-increasing distances from urban centres, changes in consumer demand and questions over the responsibility for these high-maintenance assets appears to have made developers think twice.
Golf WA chief executive Gary Thomas said golf courses did lure real estate investors.
“There are people who don’t even play golf who like the vista,” Mr Thomas said.
But he said that it was getting harder to justify building new golf courses and he had not seen any concrete development proposals since The Cut was completed in 2005.
“With the economic times, people (developers) would be posing the question: is it worth it?” Mr Thomas said.
Satterley Group head Nigel Satterley is more blunt in his assessment, having been involved in Meadow Springs, Joondalup and Secret Harbour.
“We would never ever do another golf estate,” Mr Satterley said.
He said that linear parks, thin lines of bushland or parkland separating pockets of housing, were more popular with investors and much less costly to develop.
For developers, Mr Satterley said, it was not just the upfront cost but also the management of golf courses that was expensive.
He said Secret Harbour’s golf course took 20 years to break even.
Most of the golf estates being contemplated today, like Peet’s development in Yanchep, are essentially brownfields, incorporating existing golf courses. Often they require capital injections, sometimes as a result of financial troubles at club or developer level.
National developer Mirvac, which took over the Meadow Springs development about 10 years ago from Satterley Group after buying the underlying land from ANZ, has two such projects south of Perth, at Port Kennedy and Binningup.
Port Kennedy has had an even more chequered history than Meadow Springs, whose founding consortium of General Corporation of Australia and Singaporean investors, ran into trouble, as did development financier Tricontinental.
The Links Kennedy Bay was originally planned to be a 45-hole golf course with a marina but the difficulties encountered by its founding consortium and the subsequent failure of the course’s management company, The Golf Club (WA), mean it is unlikely to expand beyond its existing 18 holes.
Mirvac took over managing the course in 2008 on behalf of the developer, Singaporean-controlled Western Australia Beach and Golf Resort Pty Ltd.
Further south, at Binningup, Mirvac also wants to expand the current boutique course from nine holes to 18. It has been marketed as Lakewood Shores but the intention is to change the name to Binningup Beach.
Yanchep Golf Estate, is somewhat different to that. Sun City Country Club is an established golf course, which was technically never quite finished, though few people would realise this.
Nearly four decades since it opened, it is engaging in a master-planned redevelopment put together by new general manager Doug Hannaford and renowned course designers Ogilvie Clayton.
Peet’s project, which includes some realignment of the course, has brought forward that development.
It appears interests associated with Peet bought the 151ha property in January last year, carving it out of a 620ha parcel controlled by the Yanchep Beach Joint Venture, which was jointly owned by Japan’s Tokyu Corporation and the family investment interests of Singaporean Koon San Ang.
Exactly what Peet paid is not known. It simply revealed in ASX announcements in the past year or so that it had completed the $55 million syndication and it expected to sell down its holding over time.
Clearly, Peet sees some financial benefit in doing the golf development, which has 4km of shared boundary with the Sun City course.
Arguably, the viability of this project stems from what was started by Mr Bond 40 or so years ago.
As this and other half-finished projects are completed, it is possible that the golf estate era in Western Australia is reaching its conclusion.