Do Golf Courses Really Sell Second Homes?

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(MANAGUA, NICARAGUA) - Talking to Nicaragua developer Kevin Fleming the other day, the subject turned to golf - specifically the value of golf in a modern second home resort.

Plans for Fleming's 923-acre Seaside Mariana Spa and Golf Resort include a Jack Nicklaus Signature course, which will be a milestone for Nicaragua. The course and the Nicklaus name are a key asset in marketing the project, he says.

But Fleming is also among a group of developers who wonder about the importance of golf in future projects. His studies show 15 to 20 percent of potential clients are interested in the game, compared to 50 percent who love the idea of a spa.

"There's more interest in eco-adventure [than golf]," Fleming says. "I don't think you can go to market as a complete brand if golf is the only amenity."

While not a new debate, this is an increasingly common discussion these days, as developers wonder if turning over a huge chunk of a property to an expensive course is really the best way to sell homes.

Conventional wisdom suggests a course can add anywhere from 10 to 25 percent to the price of a golf course-adjacent villa. But with many landscapes covered in signature courses, there is an inevitable dilution of the value, some say, especially in terms of selling homes.

A marina sells more homes, Ashley Bretecher, executive director of marketing for the Los Sueños Resort and Marina in Costa Rica, said in a recent interview. "Golf doesn't bring us real estate clients."

A recent benchmark study of courses in Europe, the Middle East and Africa by KPMG's Golf Advisory Practice found that revenues dropped 8 percent in established Western Europe markets in 2009. More than 50 percent of the courses reported a drop in revenue, with 13 percent saying the number of rounds played dropped more than 20 percent, suggesting the business may have more problems than simply a sluggish economy.

The worst sector hit by the economic downturn, the report found, were courses associated with residential developments, with 78 percent reporting a "negative impact."

While few doubt that golf will remain popular, there is a growing sense that its role will change in future developments. In casual discussions, developers often say they are finding it difficult to justify the expenses surrounding a course, especially when other amenities are clearly growing in popularity.

Courses also present legal complexities these days, with some homeowners associations balking at the cost of maintaining a course many of them never use, Fleming notes.

In addition to golf, Seaside Mariana is marketing an equestrian center and medical facilities, one of a growing number of projects wooing senior citizens.

"Golf in the future will be an amenity," Fleming predicts. "Designs will be simpler and costs driven down."

 

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