This article was originally published in December 2017.

In our first article we set down how golf courses had developed in the British Isles over the last 120 years: they originally developed in suburban locations on ideal land morphed into mini greenbelts as conurbations developed around and beyond these green lungs. The second wave of building in late 20th century has both been dislocated from local conurbations and designed and constructed on poorer land with less attention to market need and detailed excellence.

Golf now is too often a one trick pony: generally offering 18 hole courses, often on uninspiring land, poorly suited to golf and with a lack of consideration of 21st century leisure and lifestyle habits. The result has been commercially questionable golf courses struggling to survive. This article evaluates the position in more detail and identifies areas in which both golf and property industries may develop to mutual benefit.

We have argued that shorter golf layouts (from 6-12 holes) and/or other lifestyle-driven products can free up land for real estate, regularise the golf business’s finances and reflect what the market wants and needs. However, where can these new strategies be put into practice?

Overview of opportunity

The commercial imperative for change is not in much doubt from the golf business’s perspective.

Latest research (October 2017) states that of the top UK 1000 clubs by value, a third are in danger: over 20 companies are ripe for takeover, almost 300 companies are making a loss and around 50 companies have lost over a quarter of their value in the last trading year measured.

Let’s consider Surrey with the heaviest concentration of golf in the UK, reputed now to have 142 courses. Added to the financially and socially successful Surrey heathland belt of famous traditional ‘golden age’ courses (like Woking, Wentworth and Walton Heath) are plenty of more flawed clubs with a lower quality of course design or master planning, club management or simply location. They were once fairly busy, but can no longer easily move their subscribing playing membership above 350. Such a membership number makes any traditional club business model unsustainable in the medium-term.

In the past, a desire to attract more customers/members usually promoted a knee-jerk of attaching more golf – a driving range/practice area and/or adding a better short game space. This was often entirely the wrong option, just compounding the original flaw. The more likely answer is less golf and more of something new and different. In this sense ‘less golf’ can often mean much better quality and more enjoyable golf and a vibrant business attracting a wider audience.

Many clubs, struggling for membership, aimed to ‘go commercial’ to attract casual golfers. While retaining their existing club house and golf course unchanged, they looked to attract small private groups, bigger visiting ‘societies’ and company golf days (a fading phenomenon). Prices and margins are driven down and the unvirtuous circle is created: to compound the effect, members can see just how easy it is to enjoy good quality golf at other venues and at ever lowering prices and – hey presto! – the logic of paying membership subscriptions at your own course (which is frequented more and more by visiting non-members) goes out of the window. Golf, in terms of simple numbers of participants, need not suffer, as the volume of play across all age groups and venues can grow (and is doing so after recent recessionary blips) – but the fabric where most golf takes place is suffering.

Inevitable conflicts arise when club managers, chasing any possible form of income-producing activity such as weddings, wakes, or private parties, are obliged to stage them in premises designed expressly for the simple purposes of a golf clubhouse and populated by people wanting to play golf. There is ample opportunity to host a multitude of different functions if only the club house’s infrastructure is designed to accommodate them. Again, to succeed in the modern day, the club will need vision, a willingness to embrace change and, critically, investment – where is the money to come from, if not from developing real estate?

So, what about real estate development?

This can create the opportunities for people to live around and participate closely with a development of their choice which is socially positive and integrated rather than ‘exclusive’. It can create the capital necessary to transform the mono-use golf course to a mixed use, economically viable proposition which protects jobs, can enhance significant parts of the environment and contribute to Local Authority housing volume pressures: this year local authorities in Surrey will, reputedly, miss their collective new housing targets by as much as 60%.

A variety of solutions can apply – it is not simply modelling the ‘first wave’ low volume, high value residential option à la St George’s Hill, Sunningdale etc. There are already examples of inexpensive second home wooden ‘chalets’ gathered around golf courses on long leasehold terms. Further, and much more interestingly from the authors’ experience, it can also involve assisted living provision, age-banded communities and health care facilities. With an ageing population, borne up with generous pension provision this opportunity is clear. Consider the Office for National Statistics (2016): ‘the proportion of those aged 65 or over increased by 3.8 percentage points between 1974 and 2014, from 13.8% of the UK population to 17.7%. This proportion is projected to increase by a further 6.6 percentage points of the UK population by 2039.’

A balanced, mutually beneficial, mix of leisure and social formats can be promoted: health clubs and ancillary facilities (like pilates or other therapies) have already made some inroads but Local Authorities will have considered what leisure may still be needed, balanced, of course, by other policy requirements e.g. transport and access issues. Of course, this need not be a linear issue of private provision: Local Authorities with their own ‘municipal’ golf course are sitting on large land banks.

Privately owned golf courses, then, can be well located to be considered for housing or other socially desirable development. In turn, they may be re-located on other nearby land and with a more carefully-defined leisure mix, better suited to the local demand.

The target market: a segmentation review

There is inevitably a mix of likely beneficiaries of a set of changes that can be enabled by real estate development within or connected to a golf course property:

1. The willing

Existing courses that recognise they must change to survive and prosper. Most likely they will be proprietor owned, and therefore especially able and willing to make changes. They may be simple ‘pay and play’ or sophisticated high quality courses – neither are immune from commercial realities and both are likely to be commercially driven.

2. The desperate

An existing club playing in or within sight of the ‘last chance saloon’. Probably a member-owned club where committees have ruled, and managers not been encouraged to manage. Convincing a membership group of several hundred to take radical and adventurous action is notoriously difficult, particularly when committees can be loaded with retirees keen to play every day without interruption. However, the prospect of saving a club can be a powerful catalyst for members. The development opportunity is most likely to amount to limited amount of new real estate and little or no change to the golf course as appetite for/understanding of benefits will probably be low – despite the probable root cause of club difficulties being a flawed course/golf product. Without constitutional change the club’s rebalancing of its finances may be of a limited duration.

3. The opportunist/white knight

Working with an existing club to explore the potential of their property with a view to developing all or part and returning funds to build a new and improved facility nearby.

4. New ownership

The opportunity to acquire a property and operate/exit it at later date. The chance is there to consider the property with full objectivity: look at multiple options for optimising the property’s content, retaining golf in part or revised form, combined with new commercial enterprise etc. A further option? Close down all golf.

Now we have provided the context and provided some early gap analysis for the market opportunity, what are the key planning issues and likely stakeholder responses to allow property professionals to get involved? How does green belt policy figure? We will discuss this in our final article.