Golf Course Touristic & Residential Development: Weighing the Costs against the Value Added

Today, there are a whopping 33,161 golf facilities in 208 of the world’s 245 countries. Demand for golf continues to grow and further supply of golf courses is needed to meet the continued demand. According to Peter Walton of the International Association of Golf Tour Operators, “limits to supply in popular golf destinations are likely to have the effect of reigning in the rate of growth of golf vacation sales, to, we estimate, between 5% and 7% per year.”  According to Technavio’s analysts, the global golf tourism market will grow at a CAGR of 14.24% during the period 2017-2021.


As at mid-2017, there are 556 golf courses currently under construction or in planning across the world. These are primarily located in Asia, Europe and North America with 59% tied to a tourist resort or residential community. This may help to address the global demand for golf facilities.

Building a golf course is a lengthy and expensive process. In the current global economy it is becoming increasingly rare to build a golf course without accompanying real estate which is often used to help fund the golf course construction of not some of the operational overheads. Without cost offsetting against real estate many golf courses would be too costly for a viable and profitable golf business to cover from its operating proceeds in a sensible timeframe.

The average cost of an 18-hole golf course development within EMEA is now €6 million and it takes approximately 3-4 years from conception to completion of construction work. Depending upon the climate and success of the establishment and grow in phase, a course can typically open one or two years later for play.

Does Golf Add Value to Real Estate?

According to the KPMG golf benchmark between 2009 and 2014, 66% of golf courses developed were part of a tourist resort or residential community. It is generally considered that golf does add value to real estate for two primary reasons. Firstly, the facility itself as a driver for touristic demand and secondly the aesthetic appeal of the golf course to add a green open space to a project.

Of course, the golf facility should be in a destination which is popular for golf or where there is a cohesive plan to create a golfing destination.

Developers surveyed by KPMG in the Golf Course Development Cost survey indicated a measurable premium was achievable for real estate in a golf development. Furthermore, this premium was increased by 10% when a signature golf course architect was appointed.

Premium Volume of Respondents
Up to 5% 11%
6% – 10% 7%
11% – 20% 36%
Over 20% 46%

Estimated premium by surveyed respondents by KPMG

Demand for hospitality and services

Golf can help drive demand for hospitality and service businesses on the site and in the immediately surrounding area. In this regard, for buy-to-let, hotel schemes and mixed use schemes, golf can add appeal. Prospective real estate investors who can identify the touristic potential of a golf course are more likely to invest in the project.

Do golfers buy Golf Real Estate?

It is not a given that a golfer will buy in a golf project. Typically, golfers prefer to play a range of courses rather than just one. In a destination where there are a number of courses available within a sensible distance. A newer golf course development may attract golfers, but they are being attracted by the destination as a golfing destination as opposed to the golf course of the development in particular. That being said, if golfers are looking either for a base in a golfing region or can identify the potential for rental income from rentals to golfers looking to play, they become more likely to purchase.

Weighing the costs

The cost to construct a golf course varies by region and by the quality of the course. On average, in EMEA, an 18-hole golf course costs €6 million. The Middle East and North Africa, owing partly to the preference for luxury projects in addition to the need to import materials and in some cases labour, has an average golf construction cost of circa €9 million.

But it is not just the construction costs that need to be considered. Other costs and financial considerations which impact the viability of a golf course are architect fees, permits and licences, operational CAPEX and operating costs.

Unless you’re St Andrews or Pebble Beach, making a profit from golf course operations can be challenging. As a resort developer therefore, subsidy might be needed, but this should be considered in the context of the touristic income that a golf course can generate for the project, be that hotel stays or use of other facilities within the resort. The chosen operator needs to be able to make an effective business with sufficient demand at a sensible green fee.

Water costs are another factor that can seriously impact the financial viability of a golf course. This is a particularly sensitive issue in desert climates where the entire water resource is from supply as opposed to rainwater and supply combination.

In Summary

There is no doubt that golf facilities can add value to a destination and to real estate in its immediate vicinity. But to implement a golf course that will generate return requires viable demand for play or secondary facilities (hotels, spas, restaurants, taxi firms etc.) that will benefit from the tourism that it generates that would not otherwise exist. If both demand and secondary facilities are combined, then creating a golf facility will only benefit a destination or project.

In reality, very few resort courses will be able to cover the construction cost of a golf course through operational proceeds. Therefore, amortizing the cost across real estate provides an operable asset that is offset by real estate sales proceeds. As golf property commands a premium, this can be priced into the real estate assuming there is sufficient volume and margin. It is only signature championship courses that will become part of global golf tours and which will be membership based that are likely to cover the construction costs without any offset or subsidy.


There are a number of considerations to be made before deciding to implement a golf course as part of a development project. In collaboration with some of the leading experts in the golf development industry, Kenetic can help you assess and plan golf projects.

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