Golf Course Development Survey
By Laurence Gale MSc
In my role as editor I am always on the look out for interesting information for the site and magazine, so what better opportunity than to share this revealing Golf Course Development Survey with you. The twenty six page document is a very interesting read with some tantalising facts and figures about golf course development around the world.
Golf course development is a growing business across the world. International experience proves that, especially when combined with real estate and/or tourism development, a golf course can offer an exciting investment opportunity. As such, comparable primary information on golf course development costs can prove to be invaluable when thinking strategically about golf development.
My recent trip to Slovenia made me aware of the added values golf has to offer developing countries. The recent research confirms that there are approximately 32,000 golf courses worldwide. Presently, some 50 million people play golf throughout the world. Although the United States represents the largest golf market in the world with around 17,000 courses and approximately 27 million golfers, the game itself originates in Europe and continues to have a strong presence there, with more than 6,000 golf courses and roughly 4 million registered golfers.
Golf course development is a growing business all over the world. In recent years, approximately 1,000 new golf courses have been established annually worldwide. More mature markets include the U.S., Japan, South Africa, the United Kingdom, Ireland, Sweden and Spain; moreover there are also a number of countries and regions (e.g. South America, the Middle East and Eastern Europe) where golf is becoming increasingly popular.
International experience proves that, especially when combined with real estate and/or tourism development, a golf course can often offer an exciting investment opportunity. Having comparable primary information on golf course development costs can be of prime importance for developers, operators, as well as public institutions when thinking strategically about golf development.
KPMG's Travel, Leisure and Tourism Practice has prepared the attached study of golf course development costs in Europe, Middle East and Africa (EMA). The research aims to provide investors, developers and other industry stakeholders with a better understanding of the factors influencing the construction of golf courses, typical development timing and the process of selecting golf course architects and construction companies.
Some interesting facts revealed in the survey were:-
- More than half (60%) of the golf courses evaluated in our survey were 18-hole developments, 34% were 9-hole developments, while only 6% were 27-hole golf courses.
- Regarding the operational category, a majority of the golf courses included in the sample were operating on a membership (84%) and/or daily fee (55%) basis. Municipal course represented only 6% of our sample.
- The most popular locations in the EMA region for developing a golf course were parks/open spaces (39%).
- Europe, Middle East and Africa have over 4.2 million registered golfers and approximately 6,750 golf courses. Europe, with one in every 200 people a golfer, has the highest golf penetration rate (0.56%) of the three regions.
In the Mediterranean region, Spain and Italy have around 250 golf courses each. From the countries representing the remaining 18% we can highlight from the Scandinavian region Denmark and Norway, together totalling around 300 golf courses. Eastern Europe is also developing quickly with Czech Republic having more than 50 courses, and Poland, Slovenia and Hungary together totalling more than 30 golf courses.
KPMG's Golf Development Survey shows that developing a golf course in the EMA region is not always driven by a desire to make money. Very often development is driven by personal interest in the game. While 55% of golf course developments were initiated by personal interest, the second most important motivational factor was the expected profitability (characterising 46% of developments). Many golf course developments are motivated by personal interest in the game rather than expected profitability.
Respondents also mentioned other motivation factors including: exploiting synergies with resort developments; creating a regional attraction; or aiming for regional economical benefits. From a regional perspective, while in Eastern Europe golf course developments are primarily motivated by the personal interests of developers/owners (in 82% of cases), in Central Europe the expected profitability is the main driving force (for 71% of the recent developments).
The motivational factors show a strong correlation with the nature of the developments. The main motivation for developing a golf course in a residential or resort area is primarily of profit seeking (75% and 63%, respectively).
At the same time the development of new country clubs and golf courses located in parks and other open spaces are mainly triggered by personal interest in the game.
The possibility to exploit government subsidies was a relevant incentive in the case of Eastern Europe.
How long does it take to develop a golf course?
Regarding the duration of development we found that a golf course development project takes on average slightly more than four years (49 months). The pre-construction phase, including obtaining the necessary permits, planning and design, represents more than half of total development time and on average takes more than two years. Within this phase obtaining the permits takes the longest time: 17.8 months on average. Construction time including golf course grow-in takes 21.8 months on average.
How much does it cost?
When analysing the total construction budget of a golf course, a good starting point is the allocation between the pre-construction and construction phases. The following chart illustrates the average breakdown of development costs throughout an entire golf course development project.
The chart illustrates that actual construction costs of the golf course typically account for 89% of the total costs (excluding land acquisition, clubhouse, parking space and other on-site facilities). Total development costs also include preconstruction expenses like golf course architect fee, professional fees for engineering, legal and other expenses related to permits - these on average account for 11% of the total budget.
Although the development of golf still lags well behind more mature markets like the United States, it is becoming increasingly popular in the EMA region and certainly presents new exciting investment opportunities for the coming years. In the last few decades a great variety of golf courses have been developed, including short and inexpensive courses as well as expensive high-end private clubs. Our research has covered a wide range of recent developments from Spain to Kuwait, Iceland to South Africa.
Has you can see from some of the information above the survey has shown some very interesting facts about golf course development in Europe, Middle East and Africa (EMA).
The survey is well worth reading and gives out some interesting facts. The development of golf and the construction of new golf courses will certainly continue at a pace in the next few years thus generating plenty of work, tourism and wealth for all concerned.
To See the full survey click on the following LInk: From North Cape to Cape Town
For further information please contact the research coordinator or If you would like to receive a hardcopy of the survey, please contact Mark Sandilands at: mark.sandilands@KPMG.
Partner, Head of Travel, Leisure and
Tourism Group CEE
Tel: +36 1 887 7100
Fax: +36 1 887 7392