Golf's High Fixed Costs Sink Real Estate Developers as Revenues Dry Up
The business model of residential communities built around golf courses isn't working any more. For many developers with no plan B, bankruptcy remains the only option, reports real estate news website, GoToby.com.
Palm Coast, FL (PRWEB) November 2, 2009 -- Real estate sales are way down and club members are spending less to play golf, but high-end developers are still stuck maintaining golf courses and other expensive amenities. Built to increase the attractiveness of private communities, the courses turned into sink holes for cash, forcing many developers into bankruptcy. Property owners, club members, and developers are all losers, chronicles real estate website, GoToby.com.
For over a decade, real estate developers anchored new private communities with golf courses. Construction and operating costs were covered with real estate sales revenue and new member deposits. "When real estate sales ground to a halt and members spent less money on golf, developers began hemorrhaging cash; and they had no plan B," says GoToby.com publisher and real estate analyst, Toby Tobin.
Golf course based communities are suffering. Bankruptcies have hit scores of high profile communities by Ginn Company, Crescent Resources, Bonita Bay Group, the Yellowstone Club, Lake Las Vegas and more. In a series of articles, GoToby.com explores the underlying flaws in their business model, the effects on buyers, and predicts changes in future developments.
"Non-Equity Golf Communities Face Challenges as Golf Loses Popularity and Developers Flounder" covers phantom refundable membership deposits, soaring membership resignations, coercive membership requirements, and developers' overuse of shell subsidiaries.
"Future Developers will Build Fewer Golf-centered Communities predicts the decline of new golf course construction and a shift toward developments with less expensive passive amenities with lower fixed operating costs.
"Never before has the Health of the Golf Industry been so Closely Tied to the Real Estate Market" - Over the past two decades, nearly two thirds of all new golf course construction was tied to real estate development. Where did this trend lead? The article cites Bonita Bay (near Naples, FL) as an example.
"Conservatory Lot Sells at Tax Deed Sale for $15,185" documents a worst-case scenario; a still vacant lot in a Ginn-developed community acquired for $425,900 sold in a tax deed sale at a 96.4% discount four years later.
"For all too many developers of golf-anchored private communities, the only plan B is bankruptcy," says Tobin. "Meanwhile, property owners and club members are left with a lot less than they paid for." he adds. Some signature golf courses with magnificent clubhouses sit among acres of vacant lots and scattered houses. Foreclosures and short sales are common. Many developers now face lawsuits from disgruntled customers.
About GoToby.com LLC:
GoToby.com is the popular and often quoted real estate news website from Palm Coast, Florida, focusing on local and national real estate trends and private communities. Publisher and real estate analyst Toby Tobin has written several hundred articles and news items about high-end developers.
Contact:
Don "Toby" Tobin, Publisher and licensed Realtor®
GoToby.com LLC
GoToby.com Realty LLC
(386) 931-7124
www.GoToby.com
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