The cost of developing an 18-hole golf course has increased by more than 20 per cent in the past three to five years, according to a new report.
KPMG Golf Advisory Practice’s latest Golf Course Development Cost Survey for Europe, the Middle East and Africa found that the design and construction costs (excluding investments related to land acquisition, clubhouse, maintenance equipment and cart fleet etc.,) of an 18-hole golf course now ranges between €1.5 and €5.3 million in Europe, depending on location and quality, €5.1 million in Southern Africa, and €9.5 million in the Middle East, by far the most expensive region to develop a golf course.
The report, based on a sample of more than 150 courses in 27 different countries, features data collected in 2008 from new courses, where the trend is towards housing communities and tourist resorts, as well as extensions to existing courses, typically in established markets such as Great Britain and Ireland. According to KPMG the average cost of an 18-hole course varies according to quality, with a lower to mid-quality course costing, on average, between €2.2 million and €3.0 million, high-end €5.9 million, and a signature course €6.8 million.
In Europe, the average development costs for 18-hole courses vary from €1.5 million in Eastern Europe, €2.6 million in Northern Europe, €2.7 million in Central Europe, €3.9 million in Great Britain and Ireland, to €5.3 million in Western Europe.The research also found that while the costs are highest in the Middle East (€9.5 million), partly because of the focus on high-end and signature courses, which tend to be 2 to 2.5 times more expensive to construct, golf course revenues and profits in this region are also substantially higher (average revenues top €5 million per annum, with gross operating profits of more than 30 per cent.
Andrea Sartori, head of KPMG’s Golf Advisory Practice in the EMA, said: “The Middle East features the highest concentration of new, high-end and signature golf courses, designed by recognized golf course architects and famous professional golfers, who may command higher fees, but whose celebrity also beneficially increases premiums on real estate surrounding the course by more than 10 per cent.”
Of the developments surveyed, 42 per cent were connected to a tourist resort or real estate community. All of these respondents said they had achieved a premium on the sale of their real estate units as a result of their golf course, with 60 per cent saying it was worth over 20 per cent more compared to comparable non-golf course homes in the locality.
