While last year could have been characterized as a double bogey in terms of single-asset golf resort transactions, this year has been a string of birdies. In advance of golf's Ryder Cup, which begins Friday and runs through the weekend at Gleneagles in Scotland, HVS reports that hotel investors' appetite for European golf resorts has gained momentum.
According to a just-released HVS London report, this year has seen in excess of €386-million worth of major (designated as more than €10 million) single-asset transactions in golf resorts, this compared with none in 2013 and €128-million worth in 2012.
Further from the report, economic recovery is now encouraging institutional investors and private equity organizations to invest in golf resorts. These properties are now being viewed as attractive investments as they offer multiple revenue streams as well as potential for future development. Many also have the benefit of on-property, well-regarded hotels.
Much of this new investment reportedly is coming from the U.S., where golf, incidentally, has seen a huge decline of late. "American investors are seeking high-profile trophy assets on the back of the high level of home demand, a familiarity with the business and intense competition for assets signaling lower returns stateside, said report author Harry Douglass, associate, HVS London.
The reports makes the case that following a boom in the 1990s, Europe's golf resorts were subsequently thought to be oversupplied. This, coupled with tighter corporate and leisure spend, led to overall RevPAR declines. The withdrawal of debt from the market and lower loan-to-value ratios decreased vales even further, the report contends.
Some of the larger golf resort transactions include both Ireland's Doonbeg Lodge (pictured) and Turnberry, acquired by the Trump Hotel Collection for around a combined €53 million, and the sale of Spain's Hotel Guadalmina in Marbella to the George Soros-backed Hispania Activos Inmobillarios for €21.5 million. These in addition to the June sale of the Portmarnock Hotel & Golf Links in Ireland to an affiliate of Kennedy Wilson Europe Real Estate for a sale price of €29.8 million—or roughly $40 million.
More recently, Beijing-based Reignwood Group purchased the Wentworth Club in Surrey for €162 million.
"Scotland and Ireland have proved key places to invest in golf resorts but France and Spain now have a number of large-scale destinations with the benefit of a strong leisure and commercial market base," Douglass said. "Our clients are likely to be part of further transaction activity in the European market as we move into 2015."