Times are bad, putt golf membership prices are teeing off

Warren, Orchid clubs see 30% hike with higher demand from island-bound enthusiasts

Fri, Oct 30, 2020

Lee Meixian

https://www.businesstimes.com.sg/lif...are-teeing-off

TRAVEL curbs coupled with a greater demand for golf flight times have driven up golf club membership prices, some by 30 per cent or more since the "circuit breaker" began in March.

It also paints the picture of a different reality for the rich in Singapore against the recessionary backdrop of Covid-19.

Those whose wealth have not been adversely affected by the pandemic continue to have the luxury of a buffer that allows them not just to buy real estate, invest in financial markets, but also get that second and third membership that will help to increase their odds of getting a flight time on the greens.

According to price data from Tee Up Enterprises, one of the largest club membership brokers here, membership prices across the nine major golf clubs in Singapore have averaged a 13 per cent increase over the first 10 months of this year. This is as compared to a 6 per cent drop over the same period in 2019.

The most pronounced price increases since March have occurred at Warren Golf & Country Club and Orchid Country Club. These two club have seen price increases of about 30 per cent each. Both are sitting on land whose leases will expire in Dec 2030.

The "rich men's clubs" of Sentosa Golf Club and the Singapore Island Country Club (SICC) have also seen significant membership price hikes of 14 per cent and 12 per cent, respectively, since March. Part of the appeal of these two clubs is the fact that they have multiple 18-hole courses, which increase the chances of booking for members who want to play a round of 18 holes.

Trading activity in recent months has also increased. Tee Up said it closed 21 deals in the first quarter in what it considers a "slow period". It closed five transactions in the second quarter during the circuit breaker, and then a whopping 52 in the third quarter.

Active Golf also saw transaction volumes increase 20 per cent since Phase 2 began in mid-June, Madeline Choo, golf director at the firm, said.

Testament to the golf fever is also the fact that over the past couple weeks, more than 1,900 members at Keppel Club have opted in to continue their membership at the Sime Public Course at SICC, for a top-up ranging from S$3,210 (social), to S$5,350 (ordinary, associate and subscribing) and S$8,025 (corporate).

This has exceeded the club's original target of 1,500, Keppel Club president Lai Mun Onn told The Business Times on Thursday. The lease for the existing site at Keppel Club expires at the end of 2021, and the government earlier this month offered the club the opportunity to operate the public golf course at SICC from Jan 1, 2022 to Dec 31, 2030.

Asked if she has encountered members looking to sell their memberships to tighten their belts, Fion Phua, who owns Tee-Up Marketing Enterprises, replied: "If their business is still going on, government is still supporting, they are living their lives as per normal, there is no sudden collapse of property market or stock market or any South-east Asian crisis or huge retrenchment, it doesn't affect club membership."

Moreover, golf also falls into a sweet spot among current safe distancing measures as it is a sport that lends itself naturally to physical distancing, and takes just one to four people to play a round.

Ms Choo added that boredom while being stuck in Singapore and a lack of recreational options given the group limit of five people, coupled with having more time since many are still working from home, have even led some first-timers to try the game and sign up for memberships.

Vishnu Varathan, head of economics and strategy at Mizuho Bank, said that the renewed interest in golf memberships may point to the fact that these people who put anywhere from tens to hundreds of thousands down to belong to a club know that they can ride out this crisis.

Even among the wealthy, the fates are different, varying with the industries that they are in. But he noted that a large number accrue their income from diversified investments in the financial markets.

"The amount of policy stimulus that has come through has perversely boosted equities and bonds, including high-yielding bonds and all of these have played into people's balance sheets and accumulation of wealth not having been negatively impacted. If anything, people who know how to tactically go in and out (of markets) may find themselves a lot better off," Mr Varathan added.

According to CIMB Private Banking economist Song Seng Wun, these are people who have a deep-enough pocket as reserve in their stage of life to cope with the ups and downs of economic cycles.

"Yes, there is a severe economic downturn that is still unfolding, but because the government has so far managed to cushion the impact on many businesses and households, the confidence to spend by many individuals and households, although weaker, has not collapsed," he said.

While the premonition for the recovery of the labour market going forward continues to be bleak, he noted that the pandemic has not led to a sharp plunge in job creation or a huge spike in joblessness, which have a larger impact on overall spending patterns.

"If that happens, you will have a knock-on impact on the confidence in buying cars, going out to restaurants, from the smallest activities to big-ticket items like buying a home or even a club membership."