In the early 2000s, Spain experienced a boom in new developments that linked golf to the residential market, especially on the south coast were new urbanizations were appearing. According to Javier Caro, Research Director for CBRE, these newly built homes located just in front of the greens were 10 to 15 percent higher than the regular local real estate value, so developing and promoting companies started investing in many projects and started building fast.
However, after not too long, there was a problem that darkened the shining colours of the multiple greens: the economic crisis. The market simply dropped from one moment to another and those promotions that initially promised over 2,000 homes, could not go beyond 500. Some of them even remained empty and unsold, said the expert. At that time, there were a lot of agreements with creditors and bankruptcy proceedings. Some promoters even saw how their dreams were destroyed in front of their eyes and the promotions linked to golf courses increased the banks’ assets lists of properties.
In fact, around 20% of the market is still under the control of non-natural proprietorships. In other words, mainly under the financial entities that inherited these assets as a payment method due to the mortgage debts that were signed during the crisis period. Obviously, these institutions needed the money, so they started selling them below the market price to survive, as stated in the Golf Market report of the CBRE.
Real estate in the Costa del Sol: getting back on their feet
The recent importance of golf in the Costa del Sol within the country’s economy, especially when it comes to quality tourism, foresees a growing activity in the development of related products, services, and industries.
Southern Spain remains one of the most demanded golf vacations in all of Europe, where 3% of British and 2% of Germans travel south with the sole intention of practising this sport. The total number of tourists who choose to play golf represents 2% of the entire population, which makes golf the largest category of sports tourism in recent years and summed up 2,000 million Euros in 2017.
As a consequence, this has reopened the residential market located around these complexes and brought back financing and investment to the development industry. This does not mean that huge promotions are growing overnight, but rather it is just a beginning with a few thousand units.
Although Levante has some new developments in the outstanding golf course Campoamor, developed by the real estate promoter Maral, or the promotion of Metrovacesa in front of the marvellous golf club Escopión in Valencia, there are some really excellent highlights developed for the PGA Catalunya Resort or the Emporda Golf Resort, where 20 million Euros have been invested to improve the offer.
However, the Costa del Sol is flooded with projects in the development area, especially in Estepona, Mijas, Marbella and many others. Almost all real estate promoters are focusing on this area because it has better possibilities in this growing market.
Golf Costa del Sol: a large component to take care of
These promotions and investments will always be successful -almost guaranteed- as long as the shareholders agree to make the necessary changes to the complexes in order to adapt them to the new models that modern golfers look for in a golf course.
Of the 359 golf courses in Spain, 28% correspond to the Pay & Play model; 18% is a club that needs shareholders and 54% use a mixed model in which there are shareholders, but they still admit Pay & Play under certain conditions.
After the crisis at the end of 2000, many of these have fallen into the hands of banks and funds that have no experience in the area and are willing to try different management methods, Sareb being the most exposed.
Therefore, there is an interesting opportunity to include new operators who may be interested in getting on board with the new model trends, like the Fun, Family and Friends, which is aimed at non-golfers.
In addition, these new players must strengthen new business lines that could increase revenue. According to the Madrid Golf Federation, the average income of Spanish courses is 1.3 million Euros a year -in 2016-, most of which are being maintained on green fees, restorations, and shares. According to Caro, these revenues can only be increased by applying new models such as footgolf, already present in the USA.
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