Global Edition

Annual Property Review

12.50am 16th April 2008 - Property

Steady golf market despite wet trading conditions

By Charles Greville-Heygate of Strutt & Parker

With all the ups and downs in the residential and commercial property market, it is somewhat reassuring that the golf market has remained constant. Throughout 2007 the number of sales continued at a similar level to the previous three years and values remained steady.

Whilst the supply/demand relationship remains in balance values are unlikely to change much. However, in such a small market, if the number of courses available for sale increases significantly for any reason, values could be affected in an adverse way.

Conversely, if the number of buyers increases, possibly as a result of a desire to move from residential and commercial property where values are falling, without a commensurate increase in the number of golf courses for sale, values could increase.

2008 will be an interesting year.

Investment market
The strength of the commercial property investment market in 2006 and early 2007, and the high prices paid for other leisure Opco/Propco opportunities such as Esporta and David Lloyd Leisure, encouraged the Club Company to offer 10 of their properties on a 50 year sale and leaseback arrangement at an initial yield of 5.5%. However, the investment market weakened and a buyer was not found on the terms offered.

The Club Company have now completed the final health club development at Lichfield Golf & Country Club (previously called Seedy Mill Golf Club) so all their properties are now golf and country clubs. They have a very good portfolio of clubs which offer a different product to the other golf operators.

A small number of courses were offered to let during the year. Strutt & Parker acted for David Lloyd Leisure in the letting of Airlinks Golf Course to Glendale Ltd. This enabled DLL to concentrate on their racquets and health facility and relieve them of their last remaining golf course. Their previous involvement was at Woodspring Golf Club, near Bristol and Beckenham Place Park Golf Course in Kent.

Glendale have grown rapidly over the last three years and are now the seventh largest operator of golf courses in the UK.

2007 will be remembered for an exceptionally wet summer with many courses flooded and casual golf income reduced. After the negative effect on golf income of the football World Cup in 2006, operators will be firmly hoping for better trading conditions in 2008. If there are three difficult trading years in a row, this could have a serious impact on the market.

There is continuing strong interest in courses or sites suitable for landfill operations. They need to be in good locations with good access.

Extreme care needs to be taken when considering this as an option as there are many pitfalls. However, if well run, there can be substantial improvements to the course and good financial returns.

Multiple operators
Over the last 10 years there have been major changes to the groups operating three or more golf courses. Some have grown substantially and others have dropped out completely. The current table is as follows:
• Crown Golf   33
• Burhill    12
• Jack Barker’s   12
• The Club Company  11
• Marriot   11
• De Vere   11
• Glendale    8
• Luddington Investments  5
• Pentland Group   5
• British Ensign Estates   4
• Altonwood Group   4
• Leaderboard    4
• Kolven Group    3
• UK Golf Group   3

Crown Golf comfortably leads the field with 33 clubs and continues to be acquisitive. They acquired Pine Ridge Golf Centre at Windlesham in 2007. They also successfully obtained planning consent for development of 265 lodges at their flagship, St Mellion International Hotel, Golf & Country Club, together with the redevelopment of the hotel, upgrading of the course and an agreement to hold a European Tour Tournament next year. Jack Barker’s have grown significantly and are now in second place with Burhill.

Golf still remains a highly fragmented business with less than 5% of UK golf courses operated by multiple operators.

… and finally!
The marketing award of the year must go to Glendale Golf who offered all golfers a free golf umbrella if it rained while they were playing in April. Unbelievably, it never rained in April so the umbrellas were sold through the Pro Shop later in the year! Perfect.

Strutt & Parker

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