The feeling of optimism experienced earlier in the year has carried through into Q4. Confidence in the golf market is growing and we have seen an increase in the number of golf course transactions this year, writes Kay Griffiths, Associate at Savills Oxford
Many golf course operators are able to present trading figures showing increased profit for 2013 following a weaker 2012 when most operators were adversely affected by the pull of the Summer Olympics and other national events. The fair summer weather and the staging of the Ryder Cup at Gleneagles should continue to redress the balance.
In order to increase revenue, operators have been adapting their business models to economic circumstances and changes in player habits. There has been a dip in the number of players wishing to commit to club membership and an increase in the number of players preferring a faster 9-hole round, or an hour on the range, rather than the full 18 holes. Course managers have had to carefully balance the requirements of members with the number of visitor players, without adversely affecting either group. Consideration for existing members combined with effective communication regarding increases in visitor numbers and changes to green fees, alongside marketing campaigns, which engage with local residents of all ages, have been the key to success. Businesses with a range of income streams from accommodation, wedding/conference venue hire, and quality food and beverage offerings, and that have carefully managed costs, have been able to benefit from an increase in turnover and add value. Fundamental to maintaining this value in the longer term is to keep up with changing trends and adapt quickly in order to sustain profitability.
While the market is becoming more robust, it remains difficult and demanding to operate in successfully. We continue to see golf courses at the lower end of the market, or in locations with insufficient catchment, closing and reverting to agricultural use. In the majority of the country, farmland values continue to rise and therefore golf courses remain an asset where value is largely underpinned. Many mid market operators who cannot or will not diversify, or have done so without controlling overheads, are only just balancing the books. Unless prospective buyers can see significant potential for these courses, either for business diversification or alternative use, demand remains limited.
There is however strong demand from investors for quality golf courses, particularly from international buyers looking for a safe place to own property which can also turn a profit. We have seen a decline in Russian buyers but an increase in wealthy Chinese investors looking for freehold, prestigious trophy assets with a boutique style hotel or mansion style clubhouse. The Home Counties is the preferred location, exemplified by the purchase by Reignwood Investments of the Wentworth Club.
Savills has recently sold Windwhistle Golf Club in Somerset. Launched in July, the sale completed within three months. The property includes an open driving range, putting green and a clubhouse extending to 10,355 sq ft (962 sq m). Windwhistle is in a strong location and there is further opportunity for development on the site, along with the possibility to improve trading with refurbishment of the clubhouse.
Savills is currently offering Huntswood Golf Club in Buckinghamshire for sale at a guide price of £1.75m. Located in an affluent catchment area and set within mature woodland, the 18 hole golf course features a putting green, practice hole for teaching purposes, green keepers building and a spacious modern clubhouse. Huntswood operates as a proprietary members’ club, with a core group of members. Further income is generated from green fee usage and use as a venue for weddings and other functions. Turnover for the year ended 30 June 2014 is approximately £760,000 and there is potential to grow the business substantially.
Savills have also brought to the market Fingle Glen Golf Hotel in Devon at a guide price of £3m. Occupying a 112 acre (45 hectare) site, the 18-hole golf course is situated six miles from Exeter, benefitting from an attractive countryside location with extensive views towards Dartmoor. The facilities at the property include a two-storey golf clubhouse, which totals 12,072 sq ft (1,121 sq m) and there are also nine en-suite letting bedrooms. There is also a 12 bay golf driving range and a modern greenkeepers building. The site also features 24 log cabin holiday lodges. Total turnover is approximately £1.1 million per annum.
Kay Griffiths can be contacted via kgriffiths@savills.com