Golf Property Investments
Its fair to assume that golf courses will always attract sporting enthusiasts anxious to better their handicap
. Its equally reasonable to deduce that golfing resort developments, such as Morgan Forbes Ponta do Pargo in Madeira or La Manga Club in Spain, also appeal on a big scale to investors looking to cash in on the sports popularity and the vast disposable income of those who play it.
Southern Spain and Portugals seemingly unending obsession with golf resort developments has certainly brought more tourists, retirees and investors flocking to the readymade communities that a love of the sport creates. Much of this target market is also attracted to the high-end facilities provided on site.
This in turn can often boost the local economy significantly, by providing employment, local income and in some cases rejuvenation of the local areas, parks, roads, infrastructure, says Philip White of Arcos Gardens in Spain.
Year-round tourism
The most important way in which golf powers the property industry is its extension of the typical holiday letting season. Take the running, for example, on the Costa del Sol from September until May. This is the period when golfers can enjoy their sport without roasting in the heat of the Spanish sun.
In any established market, if youre buying for investment, this extends your potential income period outside the classic beach or holiday season, so can potentially ensure you get a stronger yield, says James Davies, director of Hamptons International.
Peter Esders, partner at The International Law Partnership, estimates that on average, golf properties offer ten more weeks per annum of rental income than an equivalent non-golf property. James Wyatt, partner and head of international sales at Barton Wyatt, notes that in Portugal, property occupations of 40 weeks are common, and its even possible to achieve year-in-year rentals, depending on the right property.
As for the yields themselves, its difficult to pin down agents to an exact figure. But Michael Nascimento of Morgan Forbes property development estimates that annual rental yields of between five and eight per cent are currently achievable in established markets, with premiums of 30 per cent on the purchase price on offer.
Golf developments tend to offer a large amount of green space, providing a low density environment, sometimes with striking views. However, location along with supply and demand balance is vital. Many parts of the Spain and America, for example, are oversupplied with golf facilities and property developments. Its perhaps best to buy golf properties in areas that are fast running out of premium land, like some Caribbean islands, or areas that have strict building regulations for golf and residential, like Italy will be demanded foremost, says White. Close proximity to the airport (within an hour or so) is also highly important for many golfers and prospective golf property purchasers.
Emerging property markets
Golf courses and property developments can also help to give an emerging market in a relatively low-profile region the kick-start it needs to start commanding serious investment.
Davies comments: Golf gives an emerging destination a raison detre, and an identity. Many new locations dont have enough about them to attract lots of tourists, let alone property investors or second homeowners. But once you install a decent golf course that offers good value for money, you immediately become more attractive to a very, very large market.
Take the ever-popular Madeira, for example. Over the past few years it has been trying to increase tourism, by transforming itself into a year-round holiday destination, and has used golf as a catalyst for this, by increasing its number of golf courses.
Madeira has launched a golf resort in Palheiro, Ponta do Pargo, Santa da Serra and the Colombo Resort in nearby Porto Santo.
Brand recognition
Investing in property next to a signature course, particularly those endorsed by renowned professional golfer, can often raise the profile of a development, and help boost demand.
Nick Faldo for example, is the main name behind the forthcoming multimillion-pound Ponta do Pargo golf resort scheme in Madeira, Portugal.
Property and golf developments which are associated with a well-known golfer or designer, can boost the value of a development, says James Barnes, managing director of Robson Barnes.
However, brand overexposure, can be harmful. Jack Nicklaus, for example, now has his name associated to almost 100 golf courses around the World.
Additional facilities
Not everyone has an interest in golf. Its best to invest in a resort that provides something for everyone. Increasingly developers are trying to cater to a wider audience and provide a range of leisure, spa and sporting facilities, golf being one of many. Resorts focused solely on golf can be a turn-off to some people, particularly families, and in the off-season can become deserved, says Barnes.
Looking at Ponta da Pargo; in addition to a championship golf course, it will also have
swimming Pools, health spa, a variety of restaurants and bars, as well as an avant-garde apart hotel offering fractional units for sale, with prices starting from 17,910.
Summary
Anyone investing in a golf property should bear in mind, that there are likely to be additional costs, such as management charges or golf memberships, which need to be taken into account. If buying property off-plan, it may be wise to take out an insurance policy, in the event that the developer goes bust. Conduct your own due diligence and ensure that there is not an oversupply of units available. Ultimately, look at the investment fundamentals.
by: Property journo
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