THE golf industry is also affected by the downturn, but there is light at the end of the tunnel
Golf course developments in the Middle East have been slowing down recently, with several projects being put on hold, head of KPMG’s Golf Advisory Practice for EMA Andrea Sartori told TTN.
“Golf courses developments in the region are typically linked to residential real estate and hotel development which is a market that has been affected by the global recession. This has affected the growth of golf supply as well. Bank financing and equity investment is much less available than before for projects of this nature.” he said.
“In Dubai, with an increasing number of expatriates having left the region, we also expect a decreasing golf demand of the local community, while golf tourism demand appears to be quite resilient,” he said.
But the multi-million dollar industry involving some 50 million golf players from around the world is not going away. “Despite the current difficulties, we believe that the long term fundamentals of demand and supply remain positive, and once there will be an up-spring from the economic downturn, golf developments will be back on track in the region.”
The KPMG Golf Course Development Cost Survey on the Europe, Middle East and Africa region compiled last year stated that when golf course development was combined with a real estate and/or tourism development, it could well offer a good investment opportunity.
The survey confirmed that of the 32,000 golf courses worldwide, the US represents the largest golf market in the world with around 17,000 courses and approximately 27 million golfers. Europe, the Middle East and Africa region has about 7,100 regular golf courses and roughly 4.5 million affiliated golfers.
Golf course development in the Middle East was found to be much more expensive than in Europe or Africa. Sartori said that the design and construction costs (excluding investments related to land acquisition, clubhouse and maintenance equipment) of an 18-hole golf course ranged between $2 million and $7 million in Europe, $6.7 million in southern Africa, and $12.5 million in the Middle East, by far the most expensive region to develop a golf course.
“The Middle East features the highest concentration of new, high-end and signature golf courses, designed by recognised golf course architects and famous professional golfers, who may command higher fees, but whose celebrity also beneficially increases premiums on real estate surrounding the course by more than 10 per cent,” said Sartori.
This focus on high-end and signature courses, which tended to be twice as costly to construct, plus golf course revenues and profits in this region were also substantially higher, were some of the reasons quoted.
Among the UAE’s developments were the Jumeirah Golf Estates and Tiger Woods’ course in Dubailand, Dubai, while in Abu Dhabi, the Saadiyat Island project had two courses under development, and in Al Ain, Al Qudra Real Estate is building a course as part of a real estate development.
Within the region, Bahrain is currently developing two courses within the Durrat Al Bahrain project. Jordan is also establishing golf courses within the Ayla Oasis project in Aqaba, while in Cairo within the Angsana resort in of the Allegria development will be the country’s first signature golf course designed by Greg Norman. In Oman, an 18-hole golf course will be part of Hotel Missoni Jebel Sifah, a luxury resort community located just outside of Muscat.
By Cheryl Mandy