Feb OtR: Real Estate to golf's rescue in '19 and beyond?
Volume 18 • Number 2
Real Estate: Coming to Golf’s Rescue in ’19 and Beyond?
I recently had a free-ranging discussion with one of the industry trade organizations’ leaders and the topic inevitably turned to my observations on supply/demand equilibrium and recent trends. I outlined to him that I’m seeing more real estate development activity creep back into the picture of comings and goings which we track monthly now through the Pellucid Perspective. Always a quick study, he noted how ironic it would be if, in this next chapter of golf seeking its own level of supply/demand balance, real estate rode in to the rescue for golf vs. its previous role in creating a large part of the current excess.
It would indeed be a curious twist between the two industries in their longer-term relationship going from friends (golf and the “good life” go together) to enemies (building golf courses primarily for short-term lot premium revenue regardless of ongoing viability/market impact) to friends (reducing supply and providing a superior investment return outcome to some number of golf course owners/investors). Let’s do a quick rewind and see how this might actually play out and who would benefit if I’m seeing the beginning of a trend and it has “legs” in the next 3-5 years:
- Real estate’s role in current oversupply – Real estate wasn’t solely “responsible” for the current imbalance but it definitely extended it. For years after (our) market analyses were correctly contrarian to much new golf course development and the lending institutions were heading for the doors, real estate-related golf and their unique financial model rode the horse into the ground for 3-5 additional years
- I’m seeing an increasing number of redevelopment transactions which I think represent win-win transactions. As my business associate pointed out to me, many owners have a passion or desire to run a golf course and see it flourish and continue but they’re also managing their financial future and (hopefully) some successful path to retirement and fun!
- Why are real estate transactions more beneficial to the industry than “preserving golf” and/or preserving green space via golf? I know this one’s not going to be popular with a lot of folks associated with the golf industry (or the New Green Dealists) but I’ll outline my case for why the preservation-through-multiple-transactions over time actually hurts a market’s committed and successful operators
Will the 2nd coming of real estate interests into the golf industry turn out to be redemptive? I don’t know the answer to that but the elements of money, motivation and markets are aligning to support that possibility. For our Executive Summary recipients, you can get the rest of the story one of three ways (all can be previewed and purchased at Pellucid's website www.pellucidcorp.com):
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