Business of Sport: Why golf is thriving in the UAE

Ajit Vijaykumar 13:54 20/10/2014
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World class: Tiger Woods on the Majis course at Emirates Golf Club, one of the world class facilities in the UAE.

Golf has become more than just a sport. It is now a lifestyle statement, a niche which many endeavour to be associated with. 

With a sense of luxury attached to the sport, and the high-end target audience that it attracts, it becomes a challenge to maintain a certain standard when it comes to services at golf clubs.

The members have great expectations from the clubs, and that in turn extends to the fans’ and sponsors’ expectations at tournaments.

While the golf courses in the United States and Europe have been going through a period of decline in the past few years, the situation is different in the UAE. The sport here is witnessing a boom and attracting attention from golfers, investors and sponsors from across the globe.

Elsewhere, tournament sponsorship is taking a hit, with the recent news that Volvo, who have been associated with the European Tour for the past 25 years, are pulling out of the World Matchplay Championship and the Golf Champions tournament.

However, it is worth noting that the recent Ryder Cup at Gleneagles is being looked upon as the most successful golf tournament ever in the history of the game – with some experts estimating profits to the tune of €50 million.

KPMG’s 2013 report on ‘Golf participation in Europe’ suggests a healthier movement, but two of the biggest markets- UK & Ireland and Spain- saw the number of players dropping by 11,300 (-0.9%) and -3.5% respectively.

Only 29 new golf courses were added in the whole of Europe in 2013, an increase of just 0.4%. There are now a total of 6,811 golf courses in the continent, but the numbers again decreased in the UK & Ireland and Spain.

On the other hand, UAE tournaments have managed to attract a number of multinational companies as sponsors, while the number of rounds and memberships has constantly increased at the various golf clubs. 

In 2012, 365,559 rounds of golf were played on the 10 courses in Dubai, which increased by 13.3 percent to 414,177 last year. The three 18-hole courses and the two ninehole courses in Abu Dhabi have also shown healthy year-on-year growth with slightly more than 150,000 rounds recorded in 2013.

And after a brief period of respite as the country battled with the effects of the global economic downturn, the real estate companies are back, announcing exclusive golf community projects.

At the recent Cityscape in Dubai, both Dubai Sports City and Jumeirah Golf Estates announced new projects around their golf courses, while Damac have announced a second golf community – Akoya Oxygen – after the massive commercial success of Akoya. Both communities will have golf courses managed by the Trump Organisation.

One of the main reasons golf courses are still an attractive proposition in the UAE is because the demand has not yet outstripped supply (21 golf courses in the country), but also because how well it has been used by the real estate developers to enhance their offerings.

One bit of good news in Europe came at a course where real estate also plays a part. The Wentworth Club, home to the BMW PGA Championship and the only venue in England that hosts a top-class tournament on an annual basis, saw a change of ownership. The club was bought by the Chinese luxury conglomerate Reignwood Group for £135m, which showed there is still appetite for quality projects. The sale made a neat profit of £5m for previous owner Richard Caring.

Julian Small, CEO of Wentworth Club, said it was a proud achievement that in the challenging business environment of Europe, the club had managed to finalise a sound financial deal.

“In England, we host the only professional tournament that is held in the country every year. If we look at The Open Championship, it rotates among several venues. So we have been able to be the standout club,” Small said. 

Venues in the UAE are seen as a great destination for investors due to the boom in the economy and the strong business sentiment here. Chris May, CEO of Dubai Golf which oversees the Emirates Golf Club and the Dubai Creek Golf and Yacht Club concurs.

He said: “It is a very positive situation for golf in Dubai. What is needed to  develop a game in a city or area is 10 to 12 good golf courses and Dubai already has a good portfolio. So it has made the city very attractive to golf fans in general.

“People see Dubai Golf as a world-class facility. As a result, business has been very good. We have the Omega Desert Challenge and the Ladies Masters and that in turn leads to promoting the game here and it also attract tourists from all over the world. 

“The country has been made very accessible by Emirates Airlines and others and it just makes the UAE a fantastic package for golf.”

A crucial aspect in making that fantastic package is the real estate angle. Clubs and real estate developers see great sense in joining hands and maximising the returns for each other. 

The valuation of any property increases manifold if it is at or near a golf course, while the clubs enjoy a ready population that can use the facilities all year round or fill up the restaurants and other recreational centres there. 

Projects like the Arabian Ranches and The Address Montgomerie are great examples of the symbiotic relationship between golf courses and real estate, and it’s no wonder prestigious companies like Damac are banking on golf to deliver.

“Real estate development is essential to golf. You very rarely see standalone golf facilities, especially in this part of the world. At the beginning, we didn’t have a real estate plan at the Emirates Golf Club and Dubai Creek. But then we saw what phenomenal success The Montgomerie had in that area and every new facility ever since has had real estate attached to it,” May said.

“In 2005, when we redeveloped the Creek, we created 92 villas which are all for lease. They have been very successful with 100 per cent occupancy since we opened. Recently, we did something similar at the Emirates Golf Club too. There we created 82 villas and they have been fully occupied since opening four years ago.”

Real estate development is yet to kick off at Yas Links in Abu Dhabi (pictured left) but according to Chris White, general manager at the club, that will change soon.

He said: “Yas has three plots that border the golf course. They were always intended to be developed. And (developers) Aldar have launched three new developments in the area.”

In the UAE, golf is thriving and Dubai Golf’s May added: “If we look at the Gulf region, there are three Desert Swing events and then we end the season with the DP World Championship. It’s amazing that such a small place holds such an important place in the golfing calendar.

“Also, Dubai’s success in getting the World Expo 2020 will drive the game further ahead with tourism and real estate development set to rise. The next four to five years look very bright.”

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