A growing interest in golf among affluent Chinese is driving lucrative but uncertain new real estate development.
Golf has had a turbulent history in China. Mao Zedong outlawed the sport in 1949 for being too bourgeois, and the ban was not lifted until 30 years ago. But in the past ten years, the number of 18-hole golf courses has climbed to around 1,000. According to the National Golf Foundation, the number of Chinese golfers rose to 1 million in 2012, a 16 percent increase from the previous year. This year, PGA Tour China debuted with 12 tournaments across the country. The popularity of the sport is projected to increase as China’s growing sector middle class consumers spends more of their disposable income on leisure activities.
What’s more, golf has become especially profitable for real estate developers. In the mid-1990s and early 2000s, China’s government and real estate tycoons began to establish vacation homes and activities for tourists around golf courses in smaller cities, like Spring City Resort, located outside of the city of Kunming in the country’s southwestern Yunnan Province. The resort opened in 1998 and now features two 18-hole golf courses, a golf academy, and other sporting activities. The resort currently hosts 500 apartments and villas, which have sold for $223 to $283 per square foot, a figure that is expected to rise to $446 per square foot as the resort offers 93 new villas to homebuyers in 2016.
Golf communities have much to offer affluent consumers. Prospective buyers have a wide range of housing to select from; Hainan Island’s 2,500-acre Hainan Lingshui Clearwater Bay, for instance, has sold over 10,000 villas, townhouses, and apartments since 2009, ranging from about 1,000 square feet to over 17,000 square feet in size and from $125,000 to almost $10 million in price. The community also comes complete with a shopping center and two yacht clubs.
Buyers often come from polluted and crowded larger cities, so the open space and natural scenery of the golf courses are another selling point.
“A lot of people just want green space,” Brian Curley, a partner at Arizona-based Schmidt-Curley Design, said in an interview with the Wall Street Journal. Curley’s company has designed more than 40 golf courses in China.
Although the market is booming right now, golf course developers still face hurdles. In 2004, the government declared a moratorium on gold development due to agricultural and safety concerns, and President Xi Jinping’s recent crackdown on extravagance has not boded well for a sport with affluent associations. The construction of golf courses often displaces villagers as well. Many properties in golf communities are also bought as investments but used only on occasion.
“At the moment, the golf population can’t sustain the golf industry here,” says Frank Chan, China’s regional director at Golfplan. “We need to sell houses to support it.”
image credit: spring city resorts