Golf appeals to tens of millions of players and fans globally. It is played in 209 of the 249 countries of the world on approximately 39,000 golf courses, the majority of which are found in the western hemisphere, according to the Golf Around The World 2019 report. North and South America account for 53% of world supply, while the US alone claims 43% of the total. Europe has a 23% share, followed by Asia with 16%, Oceania with 5% and Africa with just 2%.
About 24 million people participated in golf ‘on-course’ in the US in 2018, with a further 9.3 million using ‘off-course’ facilities such as golf ranges and indoor simulators, the National Golf Foundation (NGF) said. Almost one in every nine Americans (+/-10%) played golf in some form, more than participated in other notable sports, such as basketball, tennis, baseball and skiing.
On this side of the Atlantic, the number of registered golfers in Europe stood at just over 4 million at the end of 2018. However, it has always been widely accepted (although without official data) that a similar number of people play more infrequently or are not registered, so the total number of all European golfers is more likely to be around 8 million.
Besides being a popular sport, golf is, of course, a multi-billion global industry generating a steady flow of revenues in various segments. The overall golf economy in the US is valued at a whopping $84 billion and employ two million people throughout its various activities. By comparison, the European golf economy is valued at an estimated €15 billion and employs about 180,000 people, with golf tourism accounting for about 10% of the total value.
Taking all these market data into consideration, it may not come as a surprise that currently there are 198 new golf courses in construction, including 48 in Europe, and a further 336 are in various stages of planning, over 60% of which are part of mixed-use resort developments. Investors and developers still see golf and property-related development as a sound investment, and although only up to 40% of residence buyers will be golfers, premium values are being obtained for a golf-related property, especially on resorts that offer a great experience and quality service.
The changing face of the industry
So, all in all, today, the golf industry is generally in good health, or is it? The sector has largely recovered or at least stabilised after recently coming through one of the most challenging periods in its history. The global financial crisis in 2008, together with changes in lifestyle and cultural behaviour, have taken their toll on both golfers and golf facilities.
Sadly, the golf industry has also played its own part in the problems it encountered. In the preceding period, many new golf courses had been developed either solely as marketing tools for residential property, with the unrealistic aspiration and label of ‘championship’ course, or to appeal to a sector of the population that, at the time, were willing and able to pay high fees to become members and part of this affluent leisure culture.
This, in turn, fuelled more business for the ‘signature’ golf designers, who were more than happy to conceptualise highly-challenging, high investment courses. Regrettably, very little thought was given to the genuine golfing needs of the population and to growing the game. In parallel, many existing facilities felt almost obligated to invest in upgrading their facilities to be able to compete, even though many had been wonderful – and successful – courses for as much as a century previously.
Meanwhile, the gap between the elite of the game and the average player has grown. Anyone who watches professional golf on television will regularly see players hitting tee shots 300 metres+, and a 150 metre shot into a green – a six or seven iron 25 years ago – is now often just a pitching wedge. As a consequence, optimising distance is now uppermost in the minds of many amateur golfers. A professional golfer friend of mine since junior golf days, now a European Seniors Tour player, recently commented that as good a golfer as he still is, he is as much as 100 metres behind the young tour players and would be unable to compete with them on the same courses.
Modern golf courses and extended older ones may be meeting the needs of the elite more than they are meeting the desires of the person who likes to play golf for enjoyment, for exercise, and does not want to have to endure five or six hours to play a round of their favourite pastime. And time is a big factor. When I was a good-standard club golfer (many years ago), an 18-hole competition round was, at worst, three and a half hours, and a fourball for fun a maximum of three hours on a very highly-regarded golf course in rural England. But times have changed.
Exploring investment opportunities
The bigger question now is what is the future? What are the smart golf investments in the next decade or so? Developers and investors must consider several factors:
- People are time-poor and the game has become too slow for many;
- In many European countries, earnings are only now back to levels they were before the financial crisis;
- The global economy is growing, but only relatively slowly, and there are still uncertainties;
- There is a global environmental crisis;
- A modern-day golf 18-hole course can require as much as 100 hectares of land. This requirement limits the type of assets that can offer golf and is in itself an expensive utilisation of the asset if it does not deliver an acceptable IRR.
Conversely:
- Numerous studies have concluded that playing golf is good for health;
- Learning to play golf is still desirable;
- Living on or near a golf course continues to be attractive with various studies placing property value premiums at anything up to over 100% of the average home value;
- Golf’s governing bodies and other industry associations are working hard to promote the game including some new play formats.
Based on all this, what are the best golf-related investment opportunities today?
- Shorter 18-hole courses – playable by ‘average’ golfers in less than 4 hours. With some holes planned near a golf clubhouse, the flexibility exists for shorter rounds when time is at a greater premium. A shorter 18-hole course could be built on a plot of +/- 50 hectares (subject of course to topography and site encumbrances).
- 9 or 12-hole courses – similarly faster play but equally challenging and enjoyable, and for investors can be developed on smaller parcels of land or offer more land to property and other developments. A shorter 9-hole course could be built on sites between 20 and 30 hectares (again subject to the proviso stated above).
- Par 3 courses – focusing on how to play golf rather than how far to hit a ball and can be played in a short time. The land demand is also reduced to a minimum area of about 6-7+ hectares for 9 holes and 12-14+ hectares for 18 holes.
- Bigger and better golf practice facilities – that are not just about hitting many golf balls as far as possible, but ones that can offer genuine practice and learning in all aspects of the game and are therefore an experience in themselves. They can be supported by associated indoor facilities.
- Geographical perspective – the central & eastern regions provide the best opportunities in Europe, and Africa, currently very undersupplied, holds good potential for more adventurous investors.
Creating golf experiences that can be developed on as little as 6 hectares would grow the development opportunities for the game, particularly as it will increase the different asset classes (smaller land plots of hotels & resorts, country clubs, senior living communities and destinations) being able to offer golf whilst significantly reduce golf course development costs.
About the Author: Roger Jones is a tourism development master planner for resorts, destinations and regional and national products with a specialisation in golf development master planning.
