Potential dangers
The main factor threatening to dampen growth in this sector is over-supply.
The heavy development of golf course estates in recent years, particularly along the coast of Victoria, has come under heavy scrutiny from state governments.
The Victorian state government believes that many estates are too isolated and are at risk of ruining the government’s long-term planning and development initiatives.
Pepper urges investors to take heed of the government’s warning, and reiterates that an estate’s location is one of the most important factors impacting growth.
“Coastal golf courses have historically been popular due to the tourist activities within close proximity to the course, so location and outlook are highly important to ensure capital growth,” Pepper says.
Enzo Raimondo, CEO of the Real Estate Institute of Victoria (REIV), urges investors to put aside the emotional aspect of investing in golf estate properties and crunch the numbers to ensure the investment is viable.
“Golf course developments have proven to be successful in many parts of Victoria, but the market for sale and resale is fairly limited,” he warns.
“As an investment goes, be careful, as the link between lifestyle choice and real estate may limit the market for resale. In that context, it’s important to consider the lifestyle choice you’re making by buying one. If you like golf, why not? But if you don’t, I’d steer clear of them.” Investors also need to consider the type of rental structure they wish to use. If you purchase a golf resort investment and you plan on letting the property full-time to permanent residents, make sure you speak to several local real estate agents to ascertain the level of interest from renters for these types of properties. In more isolated regions, you may be better off renting the property on a holiday-let basis if the demand from full-time tenants isn’t strong.