Compared to other major golf destinations in the world, South Africa’s golf estate market seems to be relatively resilient, says the CEO of one of South Africa’s largest real estate companies.
“South Africa’s golf estate market overall has fared better than for instance the United States,” says Andrew Golding, who heads South Africa’s Pam Golding Property Group. “From 1990 to 2003, some 3.000 new courses were built in the US, boosting the total number of courses nationally by 19% at a cost of about $20 billion. However, soon after that the sport seemingly lost some of its allure. Since 2005, over 350 golf courses have closed down.”
“Compounding this problem, some real estate developers in the US had not considered the viability of the golf courses themselves,” Golding continues. “A number of these, designed by brand-name golf course architects, were championship level and too difficult for the average player. They took a long time to play and cost millions per year to maintain, pushing up annual dues and making them less attractive.”
Across the US, about 2.000 of the 16.000 golf courses are ‘financially distressed’, stats by the National Golf Foundation show. The organisation furthermore estimates are that 4.000 to 5.000 golf courses will be in financial danger in the near future if they don’t change their model.
“Some developers are recasting their golf communities to appeal to a broader band of home buyers, including more families and young people,” Golding adds, noting that while South Africa is facing similar challenges there are difference.
“The South African golf estate market is easily into metropolitan and non-metropolitan markets. Good examples are Steenberg, Fancourt, De Zalze and Atlantic Beach Estate in the Cape, Mount Edgecombe, Zimbali and Simbithi in KwaZulu-Natal and Dainfern, Silver Lakes and Woodhill in Gauteng. These golf estates are successful because they are situated in densely populated residential suburbs,” Golding says. “From a property perspective, their performance has been more or less recession-proof and actually very impressive, especially when one compares property values in these estates to the surrounding areas.”
Zimbali and Simbithi, both in the Ballito area near Durban, in particular can be good examples examples of this: Simbithi with 1800 opportunities and Zimbali 1200. 95% of both estates are sold out, with Zimbali enjoying 90% completion of homes.
“Another excellent example of this typical golf estate ‘phenomenon’ is Cape Town’s Steenberg Estate, which is listed as the fifth most expensive place to live in South Africa,” Golding notes. “There is a 540% difference in the average property value between a Steenberg home and one in the adjacent suburb of Tokai.”
It appears that in South Africa the market for golf estate opportunities outside metropolitan areas are limited, not only from an availability perspective but also in terms of the bulk infrastructure contribution levies that are required upfront by municipalities.
“However, we believe there will always be a great demand for security and lifestyle estates, in an environment where children can play with relative freedom and families can enjoy a desirable way of life, within easy reach of schools and amenities,” he says. “Perhaps one of greatest challenges going into the future is to take the golf course real estate model and apply it in less affluent communities than those who have provided the historical purchaser base.” -
The Opulent Golfer
