Niche International Property Adviser, 1 July 2007
With the golf's popularity at an all-time high, courses with adjacent holiday homes are becoming hot property. Scott Philipson investigates
Mark Twain once said: "Golf is a good walk spoiled." A good friend of mine also once described it as "the most frustrating ways to spend money I can think of." Those weren't his exact words as he threw his five iron into a nearby lake that had previously swallowed three of his balls, but close enough.
From hackers to has-beens, from professionals to protégés, from fair-weather to frustrated, worldwide there are millions upon millions who day-in, day-out attempt to hit a tiny white ball hundreds of yards into a hole in the ground three times its circumference with a range of metallic or wooden objects all in the name of sport. The numbers of golf courses in the British Isles runs into the hundreds if not thousands. For an island that is already sparking claims of over-population and where there is a distinct lack of housing supply there does seem to be a plethora, covering hundreds of square miles of land.
A good volume of business deals and networking takes place on the golf course, and this is certainly true of the mortgage world. Whichever way you look at it, golf is big business. Who is currently the highest earning New Zealand sports person? The answer is Steve Williams, who for the uninitiated is Tiger Woods' caddy. Okay, I heard this in the pub and maybe it is or isn't true but you can't help thinking that it probably is. But the monetary potential isn't just for the professionals - or professional bag-carriers - developers have increasingly structured property as part of golf course design to maximise the potential of these plots, apartments or villas. Investors are pouring in and advisers are cottoning on.
Not so long ago buying foreign property was perceived as being little more than an exotic rarity. It was not an option for the majority of people but that has changed dramatically. Lenders have made it easier to arrange finance on foreign properties, while foreign lenders have opened their door to overseas borrowers. Low interest rates have also given British buyers the chance to afford finance they would never have dreamed of in the past.
Intermediaries have also been swift to see the potential of the overseas market and there is little doubt that the number of brokers looking towards this sector is growing rapidly. To illustrate this The Mortgage Business Expo played host to many intermediaries specialising in overseas homes. There have always been brokers who could arrange this, but the number now operating in foreign property has grown significantly.
In the region of 250,000 Brits already own a property overseas, with Spain the most popular destination. Reducing the stress involved in planning a family holiday and retiring to warmer climates are just two of the main reasons people look to buy abroad.
Spain still number one
Despite recent reports of a potential Spanish property market crash slowing the latest HiFX Monthly Global Property Hotspots Report has shown Spain remains the number one destination for Brits buying abroad.It reported that 27% of all enquiries relate to Brits buying in Spain, but figures marked an overall slow down in some areas of the country particularly the Costas.
Mark Bodega, marketing director at HIFX, says: "Over the last 10 years, the western world has enjoyed the biggest property boom in its history, creating a whole generation of potential property investors. In fact, over the last decade house prices have boomed in almost every developed market with the exception of Germany and Japan. House prices in Spain, the UK, Ireland, Australia, Netherlands and Sweden have, for example, all risen by more than 50% and the value of property across the US has climbed by 30%. What this does mean, however, is that with developed economy markets at their current high, investors are increasingly turning their attention away from the traditional markets like Spain and to the emerging markets, such as those on the eastern bloc."
Darren Fretwell, head of UK sales at International Mortgages from Natwest International, explains that it's not only the beaches that are popular. There is an increasing popularity for properties situated on or around professionally designed and beautiful manicured golf courses.
"The potential surrounding areas with well-designed and attractive golf courses is increasing all the time. For advisers, dealing in the overseas property market they can prove to be a valuable source of additional revenue. Lenders typically pay introducers between 0.4%-0.5% on completion of a mortgage. While the overseas property market may be new to most brokers it should be seen as an opportunity. Build a strong relationship with a lender who is prepared to help you with your first few applications and you'll soon find the process simple and be familiar with the jargon."
Golfing in La Manga
Historically Spain and the Algarve have been hotbeds of golfing breaks and developments. In less than three decades the La Manga Club has become one of Europe's most prestigious golf destinations. It was the brainchild of American Gregory Peters. His experience and knowledge of the world's finest golf resorts in the United States, especially in California, meant that a much bigger project soon began to hatch in his mind - the first golf course in the area to be looked upon as a high level tourist attraction.
In the initial project, he and his partners intended to build a o-hole golf course and a small residential development, for which, on February 1970, they purchased a 500-acre plot of land located in a valley some 10 kilometres from La Manga. It is reported that it created such a buzz that owners of the adjoining properties, in exchange for a shareholding in the real estate company, gave up their land in order to participate.
The initial project grew with the construction of two golf courses and the whole development expanded to 1,400 acres called La Manga Golf Course.
Robert Dean Putman - a Californian, renowned professional of great prestige around the world with 20 years' experience and also a great golfer - was appointed as the architect and designer of both the North and South courses. The design of the courses was incremental to the success of the complex. The 3,000 palm trees and the general impression of the resort being an enormous green rather than a collection of courses is seen as the key to its success and popularity.
This illustrated the importance of design and big name tie-ins. I have seen more clips of Jack Nicklaus on Polaris World adverts than of the great man in action. In its sales literature the Polaris World resort development company located in Murcia, Spain, states: "Our aim was to create a series of spectacular golf courses, and it was always clear to us that Nicklaus Design and especially Jack Nicklaus himself should play an important part in the Polaris World experience."
Canadian club
As the world appears to be getting smaller through the vast array of cheaper airlines flooding the market it is natural for investors to look further a field. Canada is a country that you would not particularly associate with golf, or great golf courses but, designed by Nick Faldo, The Rock at Red Leaves is considered to be one of the most dramatic golf courses in Canada.
The luxury resort community of Red Leaves, located just two hours North of Toronto, is setting the tone for private investors looking to see a return in Canada, with a guaranteed net rental return of 7% p.a. for four years.
Red Leaves is located in Muskoka, Ontario.Muskoka is home to some of the most expensive properties in Canada and has long been considered the most luxurious holiday home destination in the province. According to the Muskoka & Halliburton Association of Realtors, typical waterfront vacation properties can cost up to $3 million CDN in this region. David McCarthy, managing director at McCarthy & Associates, says: "Red Leaves provides the perfect opportunity to invest in some of the most sought after and exciting real estate in the Canadian property market. It has the benefit of a high guaranteed return and based on historical data, potential for steady capital appreciation in the Canadian market over the forthcoming years."
Under African skies
The South African property market has regularly been in the headlines. The spectacular prices caused by the recovery of the rand have seen investors and second home owners profit very well from their investments.
It offers the natural wonders of the Western Cape, the Kruger National Park and the wine country of the Garden Route. These natural draws along with Cape Town, the perfectly opposite seasons (South Africa enjoys its summer while those of us in the Northern Hemisphere shiver our way through winter) and the minimal time difference help make South Africa a popular tourist, second home and retirement destination.
The political situation remains stable and indications suggest that this should continue. The real estate market is also seen by many in government as being at the core of the country's ongoing development and foreign investment should continue to be encouraged.
Charlotte Johns, Operations Director, Pin High Property Group, says: "In terms of golf course property in South Africa, this represents an excellent investment due to the large number of premium quality courses currently available and the climate which enables year round play.
"The Cape region specifically is an awesome African golf destination and the home of some of the best golf experiences and golfers in the world.
“The area has a wide range of courses, with the Fijnbosch at St Francis Links representing the jewel in the crown of these resorts. "We have a range of courses including quality local clubs in most towns and cities along the Garden Route to international standard golf and leisure resorts of which St Francis Links is one of the very best.
"For the golfer, all the courses provide value-for-money both in terms of the playing costs, caddies, golf karts and also membership. One of the key benefits of purchasing property on a golf estate is the associated membership benefit and additional benefits which can be garnered through the membership - these are plentiful.
As well as the individual investment opportunities, there are of course, rental benefits for the overseas investor, which can be significant and can cover the costs of the annual holiday as well as all the running costs of an overseas holiday home."
Golf is big business. It remains one of the biggest participation sports in the world and this means that the vast potential of the property market surrounding it is simply par for the course.