How investors are transforming golf courses into ‘real destinations’
For decades, golf courses have been viewed as top-shelf property investments, only available to certain high-wealth investors, but perceptions are changing.
While they remain large land holdings with substantial infrastructure – and a price tag to match – evolving business models mean not all golf course investments are the same.
CBRE Sunshine Coast director Louisa Blennerhassett – who sold the Kabi and Noosa Par 3 courses, for $3.35 million and $4.7 million respectively, in recent years – said golf courses will always be “premium to some extent”, but change is afoot.
“The courses I have sold have been established as accessible courses, open to the public with limited to no membership requirements and affordable fees,” Ms Blennerhassett said.
“These courses provide so much in the way of a community hub, where people of all abilities feel safe to have a go. Buyers have been interested in extending on this to provide a unique destination that appeals to all segments of the market.
“I think there is still a space for the more exclusive, member-only clubs; however, they tend to be somewhat limited in growth prospects as a business,” she added.
Buyer’s agent Steve Palise said investors don’t usually consider golf courses purely as an investment, but also as a mark of prestige and wealth.
“The majority of golf courses are owned by international investors and are usually purchased with cash, due to the difficulty of obtaining finance,” Mr Palise said.
“The prestige of a golf course will come down to the quality. There are quite a lot of regional golf courses that are part of the professional PGA circuit and have an air of elusiveness. In addition, there are some very run-down courses that many owners buy for land banking with the future for redevelopment.”
If a course is unprofitable, there are ways to turn it around. Adding additional income streams either through land use or adding hospitality facilities are two ways, according to Ms Blennerhassett.
“In my experience, most buyers look to add accommodation, additional activities or grow the hospitality business to provide a real destination,” she explained.
Mr Palise said it comes down to business acumen.
“It requires [buyers] to understand the drivers of what makes a successful golf course. This can be in the form of premium memberships, or for the lower end ones, throughput of customers,” he said.
Location selection is everything when turning golf courses around, as is targeting the right demographic, Mr Palise added.
“A run-down golf course has very large landscaping costs to bring it up to speed. The return on investment is quite low; however, once achieved it will remain a stable investment, as local councils will limit and plan for how much they dedicate to courses, so there will be a lack of future competition.
“Developing a new golf course is an extremely expensive exercise due having to buy out many residential and commercial properties,” he added.
“Insurance for golf courses is also very expensive, as they can be prone to floods and windstorms, which cause long periods of business interruption.”
In some cases, the land can be hugely valuable on its own. If local planning allows, full conversions can be appealing, Ms Blennerhassett said.
“Some courses held in city fringe or urban areas are purchased with a view to bank the land for future development. In my experience, many buyers have looked to pair back the golf aspect to a property in order to grow other opportunities, like accommodation, tourism or even agriculture,” she said.
Three golf courses on the market right now
With golf remaining one of the most popular pastimes in Australia, golf courses, large and small, are found dotted all over the country.
Here are three on the market worth a swing.
1. Rum Corps Barracks, Windsor, NSW
On the market for $3.3 million and being sold as a going concern, Rum Corps Barracks is a 19.6ha freehold property, which includes a nine-hole, PGA-rated course and all-grass driving range.
The public course comes complete with course maintenance equipment and machinery, plus a fleet of golf hire carts and pull-hand hire buggies.
The course has had the same owners for 25 years and they’re now retiring.
Regular ongoing group bookings for both the weekend and weekdays throughout the year are in place, providing regular and consistent cashflow from green fees, cart hire, driving range revenue, club hire and pro shop sales.
The course is zoned rural, so it can’t be used for residential development.
2. Privately-owned course, Karana Downs, QLD
Brisbane’s only privately-owned golf course is on the market for $6 million, with cash offers considered favourably.
The freehold course sits on 38.8ha, with 433 metres of direct frontage to the Brisbane River. It’s currently leased for $120,000.
The big selling point, according to selling agent Harvey Huang, of Yong Real Estate, is that the local council has indicated they want the area to be used for retirement living – and there is scope to develop 147 units.
The course already has one of the only restaurants in the suburb, with bar and bistro, function rooms, plenty of dining space, equipment including golf buggies and grounds keeping machinery and a playground.
3. Ocean Dunes, Loorana, TAS
This 18-hole championship course – rated as one of the best in the country – is located on picturesque King Island, with the club house overlooking Bass Strait.
Sitting on a total land area of 190.7ha, the property has planning approval for 80 holiday accommodation units and 21 motel suites across three buildings. It’s being offered for private sale, with freehold land tenure.
The existing course sits on the west coast of the island, with holes providing sweeping views across the rugged coastline.
The course was designed with all skill levels in mind. There is also potential to develop second 18-hole course on adjoining land.
Selling agent, Paul Mason of Melbourne-based PMRE, has positioned the property as an opportunity for the incoming owner to capitalise on the island’s ‘stay and play’ appeal and growing tourism demand. There is also a chance to exploit King Island’s shortage of accommodation.