Residential golf course projects under construction in Dubai may face delays until global economies rebound and confidence picks up among the wealthy investors they are meant to attract. Golf projects globally have been hit by a lack of financing, a change in consumer appetite, the disappearance of the speculative market and recent weakness in the pound and the UK economy, analysts say.
In the lead-up to the global economic downturn two years ago, the UK had been a key market for residential golf course sales in Europe and the Middle East. Strains in Dubai's economy have also caused many companies to reduce staff and pay expatriate executives less, further reducing the market for luxury golf courses. "There are certain projects that are stuck," Andrea Sartori, a partner at the property, leisure and tourism advisory services at KPMG, said on the sidelines of the annual Golf Business Forum in Turkey last week.
"There is no way out until the economy will improve, until there's more liquidity on the market and financing for these kinds of projects." A number of golf projects have been launched in Dubai, including the Tiger Woods Dubai, which is to be surrounded by 22 palaces and 75 mansions. The course was set to open last year but to date just a few of the holes have been shaped and grassed. The 510 hectare Golf City development that was planned as part of Dubailand was to have five courses and hundreds of villas, and was also expected to be completed next year but little work has been done on it.
"I think Dubai is saturated now," said Greg Norman, a former world number one golfer and the designer of the completed Earth and Fire courses at Jumeirah Golf Estates, a Nakheel development. "I think the opportunities in Dubai will really start presenting themselves in two to five years' time." He said Nakheel, which was to receive US$8 billion (Dh29.38bn) to finish near-term projects under a restructuring proposal presented in March by Dubai World, its parent company, was likely to complete the remainder of the Jumeirah Golf Estates development, although parts of the project might have to be reconsidered.
The residential golf development, which the developer says is nine times the size of Hyde Park in London, was to have courses named after the four elements. So far, the Earth and Fire courses have opened, while the Norman Clubhouse and much of the residential property has yet to be finished. Norman said that while the Air course appeared to be going ahead, the Water course had "pretty much been shelved" because it was to be built around a canal that seemed unlikely to be built.
"Will they want to finish off that project? Absolutely," he said. "There are people who have invested a lot of money just in that one development and they want a return on their investment." Despite chaos in the world economy that sent property prices sliding globally and led developers to reassess major projects, Norman said he was a strong proponent of Dubai as a golf destination. "The success of the [Dubai World Championship] on our Earth course last year is a testament to the credibility and the value of what Dubai has to offer," he said.
There was still room for further golf course development in the emirate as long as projects were carefully attuned to changes in demand among potential buyers, Mr Sartori said. While Dubai's golf courses had so far been primarily residential property propositions, he said investors were increasingly interested in stand-alone golf clubs. "I think there is definitely still a demand for development of golf clubs in Dubai," Mr Sartori said. "Regarding the golf community and golf course development, it's a completely different issue.
"Most of the projects [that have been affected] are actually residential estate-driven projects. The golf course is just an amenity that helped to sell your real estate at a premium." @Email:firstname.lastname@example.org