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While the game of golf was undergoing an evolution which saw fundamental changes in equipment, especially in terms of the golf ball and club shafts that made the game more affordable, other changes were also taking place.
During the same period, a full time professional golf tour also came into being, the club golf professional became separated into a section distinct from those professionals who played tournament golf full time and television turned professional golf into a major spectator sport.
Broader shifts in lifestyle expectations, especially post the Second World War, were also coming into focus. As well as the need to have two cars, the development of a host of labour saving convenience devices and the arrival of the shopping mall, post war also signalled the advent of the golf estate.
In terms of the latter, I am not sure which development can rightfully claim title to being the first golf estate in the world, but certainly the first of its kind in southern Africa and therefore in all probability the whole of the continent, was Selborne Park in Kwa Zulu Natal.
As the then director of golf at Southbroom Golf Club, only a short distance away along the South Coast, I visited the project almost monthly with Southbroom’s green keeper and watched the Selborne development take shape.
This evolution was unusual as it moved away from the estate’s original function as a working dairy farm into Denis Barker’s dream of a residential golf estate.
This development was unusual in that the required ROI’s meant that, in the majority of cases, the land earmarked for the golf estate development had a significant percentage area proclaimed as being considered to be largely redundant for any other purpose. This renders many arguments from the so called green lobby, about golf course construction consumption of prime land quite redundant. Eagle Canyon in Johannesburg would be a prime example of this and one where a disused quarry was turned from an eyesore into a successful and vibrant residential golf estate.
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Speaking to some of the original pioneers in these developments, the expectation was that golfers would be a very significant interest group when it came to purchasing properties adjacent to the golf course and offering fairway views.
With the benefits of hindsight, certainly in South Africa, therein lay the seeds to problems with the maintenance and the upkeep of the golf course that would come home roost a few years down the line.
Since the mid 1980’s there has been something of a boom in golf related developments and one of the key financial problems that are often faced by estate golf courses lies in the original nature and structure of the business relationship between the property developer and the golf facility.
In the eyes of many developers, whose focus is, not unnaturally, on property sales, a golf course is seen as a very attractive package to help market and sell the development.
In the past little thought was given to the legacy aspects of how to sustain the golf course, as an integral part of the estate, once the stands had been sold and the developer had moved off site and onto a new project.
There are many examples where the balance between the needs of the developer in the sales stages of a project, either through greed, unrealistic expectations or poor financial models, have not been in realistic step with the longer term needs of the golf course and its related facilities.
This problem was then further aggravated by the over optimistic projections regarding the number of golfers who would purchase and take up residence at the new estates.
What transpired was that a significant majority of the residents and homeowners at golf estates did not in fact play golf. This unexpected development was subsequently borne out by the international average on this ratio, which put the numbers at about 75 / 25 in favour of the non-golfers as residents at estates with a golf course as the key centrepiece.
Added to this mix are regional factors outside of the fairway view aspect (who wouldn’t want to look at a golf course from their lounge windows?). This includes for example the need for secure suburban fortresses in South Africa, but whatever these may have been, the net result remains that the preponderance of golf estate residents and property owners do not in fact play golf.
Fortunately the lessons have been learned from these types of miscalculations and the expectations re-thought to a point where, with some of the much newer and larger mixed use estates such as Steyn City, north of Johannesburg, forecasting that as little as ten percent of their residents will become golf members.
This revised expectation now views revenues from members’ activities who are residents or homeowners much more conservatively than has been the case in the past.
This change in thinking brings forward the parallel need for entrepreneurial and innovative thinking in managing the golf facility in an industry where management skills up to this point have been, quite naturally, largely custodial.
Golf at club level, now more than ever, needs to be seen as a real business where flair, innovation and experimentation are encouraged coupled with the requisite custodial skills. The real fear should not be in the failure of a particular plan or initiative, but rather in the consequences of not being willing to try something new.
We now understand clearly that the relationship between the developer and the golf facility needs to be managed carefully from the outset. This must include a completely objective and dispassionate view of the downstream, post property sales phase, and the needs of the golf facility. If it is not then it can turn out to be recipe for future disaster. From an investor’s or buyer’s perspective, the golf course must be seen as an essential part of their property’s investment value, whether they are a golfer or not.
History clearly shows that where the relationship is not carefully structured, promoted clearly and honestly and then managed realistically, the most likely outcome will be one in which the golf course, due to a lack of provision for adequate funding, will become a significant liability in the overall context of an estate’s financial activities.
As Jeff Gilmore explains “even if it has already been fully integrated in to the estate, unless the golf course can be managed effectively to at least a break-even point as the first phase goal, it will continue to be a bone of contention amongst homeowners (especially the non-golfers) and a recurring and unwanted item for discussion at every AGM”.
Jeff goes onto explain that the golf course has to be seen as a core and integral element of the complete facility and must not be allowed to be sheared off into a separate entity. No matter how imaginative this process might be, it will not change the fundamental inter-relationship between the golf course and the estate itself.
From the outset, many developments create the sale of creative golf membership vehicles in the form of debentures and founder categories, Shares were often little more than a cosmetic wrapping, which masked the real downstream needs.
The newer estates, where a golf course is part of the overall package have learnt from these marketing and presentation errors and Steyn City sees golf only as only one of the lifestyle features it offers residents, all of which must be supported by the homeowners.
It is not exactly a case of their marketing the facility to the non-golfers on the ‘if you don’t like it buy somewhere else basis’, but the fact that the golf course is seen as an integral part of the facilities from the outset, giving the prospective buyer or investor a clear understanding of their responsibility within the community, both to it and the other sporting a recreational facilities that might be part of the package.
Pecanwood Estates is embarking on retrospective actions to address this issue within its structure, along the theme of total ownership by every homeowner of every aspect of the estate’s facilities irrespective of personal preferences or interests.
Presenting the golf course as an integral part of the whole development (alongside other recreational elements such as boat clubs, tennis facilities and gyms for example) and marketing it to potential buyers as such, removes any of the false expectations associated with the fact that just because they don’t play golf, or own a boat, that the use of these facilities will be free of charge.
This approach will ensure that the golf course is securely anchored at the core of the development along with its roads, gardens, sewage processing plant and security fences. It will also ensure that every property owner understands that the value in their property investment is inextricably linked to the maintenance and wellbeing of ALL the facilities that the estate offers and not just the ones that they choose to use personally.
