Golf growth moves beyond America and Britain

Golf growth moves beyond America and Britain
From China to Mexico to Ukraine to Dubai, most fairways still are part of residential projects
By Kevin Brass Published: April 12, 2007



Now that Britain is saturated with fairways, greens and bunkers, David Hemstock, a golf course architect, travels the world looking for work.

"In the U.K. we're golfed up," said Hemstock, who has run his own design firm, David Hemstock Associates of Derbyshire, England, for 16 years. Once focused on business within the country, he now designs courses in China, India, Romania and even Ukraine, where he is helping to build that country's first courses.

"Odessa could be the new Bulgaria," Hemstock said, referring to the southwest Ukraine's potential as a sunny second-home market.

The continuing growth of luxury residential and resort development around the world is fueling a high-stakes competition in the traditionally staid community of golf course designers. Architects are increasingly trying to top each other with elaborate layouts and spectacular water elements to woo homebuyers to international projects.

Today, three-quarters of all the golf courses planned or under construction are outside the United States, Britain and other traditional golf centers, according to industry estimates. With 17,000 courses already open in the United States, for example, the number of new 18-hole courses opening there plummeted to 119 in 2006 from a peak of 398 in 2000, according to the National Golf Foundation.

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Of the courses being developed around the world, 70 percent are tied to real estate developments, a much larger proportion than ever before, according to Keith Carter, managing editor of Golf Inc., a U.S.-based industry magazine. And a well-known course architect can add more than 20 percent to the value of a development's houses and jump-start a project, industry executives say.

"The name gives credibility to a development," said Alan Mishkin, president of U.S.-based Abigail Properties, which is building Las Palomas, a residential and golf project in Puerto Peñasco, Mexico.

"Golf courses are not money makers," he said. "They're the sizzle on the steak" of residential developments.

The focus on houses - and the resulting demand for boldfaced names - has prompted a flood of pro golfers into the design business, led by stars like Greg Norman, Nick Faldo and Gary Player. In December the sport's biggest name, Tiger Woods, formally entered the competition with the announcement of his first signature course - part of a $7.5 billion residential and entertainment complex in Dubai.

"If the goal is to sell real estate, the smaller guys are probably not even going to have a shot" when it comes to selecting who will design a development's course, Carter said.

But some developers say they do not really want or need to pay top golfers for their projects, particularly because some stars have little involvement in the work other than showing up at an opening ceremony.

"I don't necessarily buy into it as a developer or as a golfer," said Brian Dobbin, chief executive officer of Newfound Property International, a London-based company that is developing projects in Canada and the Caribbean. "I want to go to a course because it is designed well."

In addition, fees for top designers are skyrocketing, prompting many developers to think twice before signing on with a big name.

The legendary golfer Jack Nicklaus, one of the granddaddies of the design business with more than 300 courses to his name, usually charges a minimum of $2.5 million, plus a cut of residential sales, for his signature on a course, according to Paul Stringer, senior vice president of business development for Nicklaus Design, which is based in Florida. (Architects's pay typically is 6 to 12 percent of the overall budget for the course, depending on the design services that are to be provided.)

And, following the market, international courses now represent 75 percent of the business for Nicklaus Design, up from 25 percent four years ago, Stringer said. The firm has 118 courses either under construction or in the planning stages, including 14 courses in Mexico and another 12 in the Caribbean. In addition to the Middle East and South Africa, Asia has also developed into a primary focus for the company, with new courses under construction in Vietnam and Cambodia.

"In the '80s we did a lot of work in Japan, and then that slowed down," Stringer said. "Now Korea is in the role of the new Japan."

The number of courses in Eastern Europe alone has grown to 134 in 2006 from fewer than 10 in 1992, according to a study by KPMG Advisory, a consulting company based in Budapest. And as in the rest of the world, the majority of them are tied to residential developments.

To encourage growth in Eastern Europe and Russia, golf course designers are routinely stepping outside their traditional roles to join the development team early in the process, and in some cases they are even helping with financing.

"The competition is so fierce, you have to bring extra value," said Quentin Lutz, vice president for global business development of Arthur Hills/Steve Forrest & Associates, a U.S.-based design company.

Even the most basic project now requires a dramatically expanded set of skills, designers say. Beyond tee elevations and pin placements, designers have to be experts on water conservation, agronomics, government regulation and environmental policy.

"The planning process is much more rigorous these days," said Ken Moodie, president of the European Institute of Golf Course Architects, which is based at Chiddingfold Golf Club in Chiddingfold, England.

The good news for designers is that high demand for new courses is expected to continue. According to a study by Ennemoser Consulting of Innsbruck, Austria, the number of golfers worldwide is expected to grow by 35 percent by 2010.