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Keep Your Eyes on the Green

Category: , Posted:28 Oct 2007 | 12:00 pm

One of the greatest signs you'll see around the world of a growing affluence for luxury items is in the golf industry. Be it Tiger Woods stature as one of the most recognized personalities of our era or the upswing in men, women and kid's taking up the game – not only does this trend spill over into merchandise, travel and the game itself, but its natural association with real estate is a match made in heaven.

Hit the greens in most Western countries and premium courses are often lined with villas, homes, townhouses and apartments. In many cases, the financial modeling of mixed-use development planning places the emphasis on real estate with the course simply adding unique selling opportunity. The graying population is often targeted with these types of projects due to favorable economic situations and increasing demand.

Zoom into the Phuket market and there are five quality courses: Blue Canyon at the top of the heap, Laguna <link>http://www.thephuketinsider.com/hotels/index.php*Phuket's resort</link> course, the Mission Hills on the east coast and two mainstays in the center of the island with Phuket Country Club and Loch Palm Golf Club. Throw in the new Red Mountain course, formerly known as the Loch Palm nine-hole "C" course, and there are visible moves underway on the supply side.

Selling property on or near golf courses first occurred on the island in the 1990s with housing lots at the-then Banyan Tree Golf Course, condo blocks at Phuket Country Club and Blue Canyon, and townhouses at Loch Palm.Some residential developments were built near the action, such as Anuphas Golf Ville, to cater to both the domestic and foreign market. While there was a product available, sales were sluggish and capital appreciation minimal.Fast-forward to 2002 and the market explosion saw the foreign-dominated property market emerge as a critical element in the island's economic boom. Laguna successfully launched its golf residences and townhomes, Loch Palm brought an affordable element to the equation, and suddenly there was growth in the market.

As the market continued to expand, the golf lots at Laguna sold out, Blue Canyon unveiled plans with Deutsche Bank and Adrian Zecha for a high-end development, and at Phuket Country Club's executive nine-hole course, the ambitious multi-million-dollar Baan Cocoon was launched.

Loch Palm also came up with a variety of products in the marketplace, while Mission Hills' Jack-Nicklaus-designed course opened with no real estate component and continual refusal to budge on the matter hampers its prospects of excelling.

There has been a shakeout over the past few years. Laguna has sold out of golf-course view property and Blue Canyon remains mired in legal disputes with no resolution in sight. Phuket Country Club has been content to take a slow road while a number of privately-developed properties inch nearer to its main 18-hole course. Meanwhile, Tai Muang in Phang Nga province appears to be poised for high-end redevelopment as a significant mixed-use project.

In terms of capital appreciation, the townhouses at Laguna are a success story. Entering the market just a few years ago, units that sold for 12 million baht now trade close to 25 million baht with returns at 20% to 25% per annum.House lots at the same estate that sold for four million baht seven years ago now resell at 12 to 16 million baht. There is golf on the green, but the question remains: why aren't there more golf-course properties in Phuket?

From a tourism and leisure standpoint, Phuket's strong point is its beaches. Seafront and seaview property has the greatest demand and appreciation far beyond any other product. Marina property, with the exception of Royal Phuket Marina, historically has low returns, though golf-course land has bucked this trend. While there is a market, it's hard to determine how deep it is and which product will rise to the top.

Buying into a golf-course property in Phuket has seen good yields for investors. Long-term prospects look good to see this sector grow. While in other parts of the world, golf property commands some of the biggest premiums, the market in Phuket has yet to find the right formula to hit jackpot numbers.

The next few years will see an interesting turn as more niche products emerge; this is one area worth keeping an eye on.

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