ASSET TURNED LIABILITY
by Lim Lay Ying
Property Times, New Straits Times
13th November 2004

There was once a time when golf and country clubs were the hot topic of coffee shop patrons. Conversations about how difficult a particular course was, or how wonderful the clubhouse amenities were, were not unusual. Since then, golf courses have been offering club membership packages for keen golfers who wished to play at a certain golf course without having to fork up green fees each visit, and also to have access to club amenities such as a swimming pool, tennis and squash courts, a gymnasium, and so forth.

Ardent golfers would know that these memberships do not come cheap. Back then, these memberships were priced to reflect the prestige of the club and to give access only to the privileged few. On top of the expensive investment, there was also a monthly subscription.

In those days, Recreational Club memberships, whether Golf or non-Golf, were once an asset of pride – a status symbol if you will, especially if the owner of the membership was a young business upstart. They command a certain level of respect – hence prompting members to proudly display their club membership stickers on their BMWs, Mercedes, Volvos, and so forth. Golf clubs, especially, were busy advertising and golfers would exchange experiences about certain golf courses over a couple of drinks. It soon became a fad that became a benchmark or reflection of affluence. Some people were even convinced that some recreational club memberships offered attractive investment opportunities, since these memberships were transferable. Some would buy into a membership hoping that it would be resold at a much higher price. Interestingly, these memberships did actually appreciate in value, albeit for a brief period only as it didn’t last.

Not only did the appreciation of the value of these club memberships fall below expectations, most values have even dropped far below their original prices, as reflected in their secondary market asking prices. For instance, a golf club membership that was once originally priced at RM60,000 to RM70,000 per person, may now be worth only half or less in the secondary market – see Table. Just ask anyone who owns a membership in an ‘owner’s club’ or even a ‘member’s club’ golf course and they would relate their stories to you – sometimes so passionately that you’d think they were teaching you something about life!

For some time now, there hasn’t been a rush to join these recreational clubs – golf and non-golf, which could be due to numerous factors ranging from economic issues to demand-supply imbalance, changes in lifestyles, and phenomenal transformations taking place in the property development industry.

But it is also the following forces which have threatened the survival of golf and recreational clubs (many of which are already struggling to stay in the black), and most aren’t showing any signs of disappearing – at least not in the immediate future.

Competition from modern properties

Condominiums and serviced apartments today are not like what they were a decade ago. Many new schemes in affluent areas come with a wide variety of amenities ranging from sports facilities (such as jogging tracks, gymnasium, fitness circuits, etc.) to recreational ones (e.g. various types of swimming pools, landscaped gardens, etc.).

Not only the quantity of amenities, but even their quality has advanced to higher levels, incorporating various pool concepts, broadband facilities, sky gardens, etc. Some schemes, including some landed-home neighbourhoods, have their own recreational clubhouses that come with basic recreational facilities. Memberships to these clubhouses are usually included in the home purchase. In most schemes however, club facilities are accessible only to the residents.

Competition from alternative sources of recreation

The high-entry cost to own a recreational club membership effectively turns many away towards searching for other forms of recreation. What was once a pride now is being humbled by a plethora of new and exciting sources of recreation that catch even the eye of older folks – and they’re much cheaper too!

Modern shopping centres, urban entertainment or recreation centres, and even branded fitness centres have become the new centres of energy, along with sidewalk cafés, al-fresco dining restaurants, and multi-screen Cineplexes.

For example, the newly opened and attractive fitness centre, ‘Celebrity Fitness’ at One Utama (Bandar Utama, Petaling Jaya), is fast attracting a large crowd of fitness and aerobics enthusiasts. The RM8.8 million investment features a 27,000sf fitness centre that includes 3 aerobics studios and former MTV professional choreographers. With their reputable ‘celebrity’ trainers, the aggressively-expanding fitness club which offers highly affordable joining terms is quickly becoming popular.

Competition from technological influences

Technology which is evolving by the minute is changing lifestyles and molding new habits and behaviour everywhere. Multimedia Cell phones, ASTRO, PDAs, P4 computers, Wireless Broadband, and many more, are some of the major technological advancements. Along with the constant learning exposure to various sources of media, these have made teenagers and young people alike more independent and individualistic today for their recreational needs than they were before. Family recreation is becoming less practised, except perhaps for those with very young children. Since traditional golf/recreational clubs were planned for and targeted at the family unit mostly, the trend has resulted in lower patronization of clubhouse facilities.

With competition coming from so many directions, it’s about time the owners and management of golf and recreational clubs start getting their act together. Of course, there will always be golfers to patronize the golf courses, but monthly subscriptions and occasional food and beverage revenue alone aren’t sufficient to keep the club afloat. The expensive memberships are not helping any more than old and outdated gym equipment. The initial investment in establishing the facilities has been hefty, but maintaining them would certainly be burdensome if the number of active members either stagnate or dwindle even.

Everything and anything under the sun has been evolving – homes, retail, offices, lifestyle, and so forth. The time has come for golf and recreational clubs to restrategise and take into cognizance, the major forces brewing in the horizon. With the current rapid pace of change dawning in the local leisure, entertainment and recreation scene, the call to evolve had never come at a much better time.