Annual Golf Property Review: Change brings opportunities
Story published at 12:20, Friday, June 10th, 2016
Last autumn we commented on the growth in the number of UK golf courses from 1862 in 1988 to 2931 in 2014, which combined with static or falling demand from golfers has resulted in a supply-demand imbalance.
This trend was also noted at the UK Golf Course Owners conference held in Harrogate in January, in the context of the effect that this might have on rateable values which are currently being reviewed nationally. Rateable values are intended to bear some relation to the rental value of a golf course under certain assumptions. We have seen limited growth in rents paid for golf courses over the last 5 years, and in some cases rents have fallen, but the circumstances differ in every case and as few golf courses come available to be let on the open market, it is more difficult to identify the true open market rental value of an existing golf course.
This will provide an interesting challenge for the current review of rates which will update the rateable value identified on 1 April 2008 to the new base date of 1 April 2015. Savills is able to provide a comprehensive rating service for all types of commercial and leisure related property, including golf courses, driving ranges and golf hotel/country clubs. Further information can be found in the spring 2016 edition of Savills Aspects of Leisure publication, a copy of which can be found by visiting Savills leisure website on www.savills.co.uk/sectors/leisure-and-trade-related.aspx
Whilst open market lettings are rare, Savills Leisure is instructed to offer Oadby Golf Course at Leicester to let on the open market in the spring of 2016. Oadby closed in April 2012, and planning permission was obtained for development of a 15 bay floodlit driving range in October 2013, which will broaden its income generating potential. A local authority
operated golf course closed on the western side of Leicester in October 2015 and re-opening of Oadby on the south east side of the city with a new golf driving range would therefore take place in a market where the supply has recently been reduced.
Another interesting development in the golf sector is the return of Topgolf to the UK development market. The Topgolf concept was first conceived in the UK nearly 20 years ago with development of sites around London at Watford, Chigwell and Addlestone. The game is a driving range based concept which uses high tech computer tracking of golf balls hit at a range of targets, enabling computer based scoring between players. It is a highly popular social activity and development of 21 sites in the USA has refined the product and its marketing which is now being brought back to the UK. Savills has been retained to advise Topgolf on their UK site search which will focus not only on existing driving ranges in urban locations, but also on leisure/retail park and business park locations which provide suitable catchment areas.
The primary targets will be London and major UK cities, Topgolf’s objective being to develop two to three sites over the next 5 years. Please let us know if you or your clients have land which might be suitable for this development concept.
Whilst there has been some fairly gloomy press over the future of golf, we are still seeing transactions completing and there are still well located businesses which are maintaining their market share. Structural change in any market is inevitably challenging, but such change also brings opportunities and seeing the return of Topgolf with ambitious development plans is welcome news.
For further information, please contact: Ian Simpson, firstname.lastname@example.org