For golf facility owners looking for more reasons to be bullish about the golf business, recently published data from Leisure Investment Properties Group, LLC. points to another promising year as it relates to the underlying real estate value of America’s nearly 14,000 facilities.
At least that’s one way to interpret LIPG’s 2024 “Golf Investment Report,” the annually published report that covers the state of golf course values, national sales data and other macroeconomic forces affecting the leisure real estate asset class. To no surprise, one of the report’s main takeaways for course owners is the market continues to strongly favor sellers.
For instance, in the latest report authored by executive managing director Steve Ekovich and his Tampa-based brokerage firm, LIPG’s data indicates there are “66 percent more golf buyers in the market than there were prior to 2019.”
Consequently, despite recording a 14 percent drop in sales transactions in 2023, or 84 total courses, excluding large resort and portfolio sales comprising multiple courses, the average sales price in 2023 dramatically increased 20.6 percent to $4,979,399 from $4,129,022 in 2022.
However, the median sales price in 2023 declined 4.5 percent to $2,465,000 from $2,580,900 the prior year. According to LIPG, in both commercial and residential real estate, the median is considered a better indicator of values than the average which can be affected by either numerous “small sales or a few large sales.” Thus, some of the biggest golf course transactions last year, including nationally ranked Streamsong Resort in Central Florida, which sold for a reported $160 million, and Arcis Golf’s major acquisition of Pacific Life Insurance’s West Coast-based portfolio highlighted by nationally acclaimed Grayhawk Golf Club in Scottsdale, Ariz., and two other high-end courses, were excluded from the report’s 2023 sales figures as they would greatly distort both the average and median values.
Nevertheless, the average sale price was the highest since 2015, when LIPG reported 132 transactions generated an average price tag of $5,012,316. Since LIPG began collecting national course sales data in 2006, the 2023 report now shows a running tally of 1,961 courses sold in the 17-year timeframe for an average price of $4,311,966.
For those wondering why the average value of a course sale went up so much in 2023 while the median value went down, Ekovich explained in the report overview, “Both gross revenue and EBITDA are up on just about every course in the country and that has continued a four-year trend. … With the national media outlets jumping on the golf bandwagon and other commercial real estate investment returns going down, non-golf investors are looking at golf as an opportunity for outsized returns.”
Ekovich added that his firm expects more of the same conditions this year with “more money-chasing golf assets,” and likens the current market dynamics to the 2011-13 timeframe when buyers/investors were busy picking up a lot of real estate bank owned properties on the heels of the 2008 financial crisis. According to Ekovich, LIPG also anticipates “values to continue to rise steadily as revenue and EBITDA continue to grow, albeit at a slower pace.”
“One quarter into 2024, the horizon beckons with promise tempered by looming headwinds,” Ekovich went on to conclude. “Against a backdrop of geopolitical uncertainties and economic challenges, the golf industry remains poised for growth, albeit at a measured pace. As demand continues to surge and values ascend, strategic consolidation and a renewed focus on operational excellence will define the landscape, offering a roadmap for success in the years to come. Russia is still trying to take over Ukraine, Israel is fighting Hamas in the Gaza Strip, and the politicians in the US are fighting over the border aid to our allies, and not getting anything done. We are in an election year with two polarizing figures. What could go wrong?”