The pandemic has reinvigorated the business of golf globally, where plentiful outdoor spaces provide ample room for social distancing. 

With many clubs’ inherent offering of exercise facilities and rooms for remote working, it is little surprise that amongst industry groups 2020 was labeled the year of resurgence for golf. 

While ample spaces and social distancing became the most important aspects in people’s lives over the past two years, they also became some of the key requirements for real estate.  

The pandemic led to a significant downside for several sectors, with the entertainment and recreational sectors being some of the most impacted. For golf, it was perhaps a bit of a silver lining, with many realising that it was a safe sport to either return to or take up.

The UAE was locked down earlier and more restrictively than most. When the country moved out of lockdowns and quickly adapted to new realities, the rest of the world was still struggling with the change in lifestyle. Slowly, as countries reopened, many at first were only allowing people to go for walks and see select family members or friends. This opened the door for golf as one of the activities people could play both safely and outdoors. And as a result, we have seen an explosion in golf and golf centred activities. We haven’t experienced such an increase in interest since Tiger Woods burst onto the scene. So the big question now is: How much of this sport is going to stick?

Golf is a community builder. The key attraction of golf is that you can be outside, and get to spend four or five hours in a round of golf with somebody, allowing connections to be made in a safe and healthy manner. However, traditional golf has recently been overshadowed by a modern, newer phenomenon called Topgolf.

With its restaurants, lively music and video-game setting, Topgolf’s popularity around the globe is already unprecedented, and it is no different in the UAE. Any given night of the week, the bays at Topgolf at Emirates Golf Course are packed, literally rocking the surrounding, traditional golf course. 

Moreover, crazy-golf experiences such as Puttshack, Junkyard Golf and Swingers in London have taken the golf experience into central locations. These new experiences have provided a taste of the sport and encouraged beginner or fringe golfers to go out onto the course and play 18 holes or nine holes. 

Golf wasn’t appealing to the younger generations. It took too much time and wasn’t interesting to them. To an extent, they weren’t even allowed to play music! 

Topgolf changed the traditional mindset and was, in part, a precursor to rule changes being enacted, which has led to introduction of speakers in carts, which led to a new, engaged and fun generation of golfers taking up the sport.

This leads us to golf courses in a community. Having a golf course in a community is extremely common across the UAE, with many of the larger estates, like Dubai Hills, Emirates Hills, and Sports City, having a centerpiece of a golf course.

The golf course/business is inextricably intertwined with the real estate business. Most golf courses are created as an amenity for residential development or amenity for a resort. It is rare for a golf course to be sold over direct replacement costs. When you factor in buying the land, building the golf course, and building amenity-rich clubhouses, the value of the golf course rarely achieves par, which explains why most of these are currently built as an amenity.

Most investors prefer to buy a golf course from the developer who has been running it as an amenity. Developers may not have been necessarily looking to make an operating profit, so such courses generally either lose money or breakeven. An operator on the other hand, will look to achieve operating profits. They are able to leverage their experience and look to achieve revenue maximization and benefit from synergies from across their portfolio, whereby they could achieve margins ranging from 10 to 30 percent. Golf courses are therefore not just amenities for the communities that surround or neighbour them but a significant opportunity for value creation for long term, proactive investors.

If you would like to know more about the business of golf, please listen to the brilliant CBRE Weekly Take podcast https://www.cbre.com/insights/podcasts/twt-episode-243-sultans-of-swing or contact Alex Barzycki on alex.barzycki@cbre.com to be connected to our global specialists.