VietNamNet Bridge – Investors once rushed to pour their money into golf courses, believing that this was a gold mine to dig. But they may have changed their mind when seeing 2/3 of the operational golf courses taking loss.

Golf courses get deserted in economic recession

Nguyen Van Hao, Secretary General of the Vietnam Golf Association (VGA), noted that it’s impossible to make profit if only providing golf services.

“Only 10 out of the 32 operational golf courses now can break even or make a modest profit. Most of them are in HCM City, Da Nang, around Hanoi, Hai Phong and Quang Ninh province.

Golf courses maintain their operation by issuing membership cards. When a member plays golf, the golf course collects $20 on average from each. Meanwhile, visitors have to pay 3-5 times higher.

“If investors only collect membership fee, they would have to wait a long time to recover the investment capital. Therefore, they have to do some other types of business as well,” Hao explained.

A lot of golf course developers injected their money in the real estate sector. However, since the real estate market has been frozen over the last few years, the investors cannot make money.

The Phu My golf course project is designed to cover an area of 165 hectares. It would comprise a 27 hole golf course, the villas to be arisen on an area of 16 hectares, multi-storey houses (12 hectares), hotels (7 hectares) and conference center.

However, it’s still unclear when the real estate items, including the houses and 200 villas can be built. The investor, the joint venture between a South Korean company and a Vietnamese company in Binh Duong province, has delayed the construction maybe because they fear the products would be unsalable.

“Even the houses in the inner city have been left unsold, let alone the houses in the golf course area,” said Mai Van Nghia, Deputy General Director of the Phu My Golf Course.

The joint venture’s initial investment plan showed that it would take the investors 20 years to take back the investment capital, if it purely provides golf course services. If the real estate trade goes well, it would be able to take back the investment capital after 8 years, which means that it would only make profit from 2020.

In order to become a member of the golf club for 46 years (the duration of the project), every player has to pay $63,000 at once. According to Nghia, over the last 4 years, since the day the golf course began issuing membership card, approximately 400 membership cards were issued, while the investors hoped to have 600 members.

Nghia said that the investors did not build the golf course with the borrowed capital; therefore, they are not under the pressure to pay loan interests. However, in the current economic conditions, very few people have money to buy membership cards. Therefore, it is predictable that the investors would have to wait longer than initially planned to recover the investment capital.

The owner of a golf course revealed that the number of the membership cards cannot truly reflect the actual business performance of golf courses. A high proportion of the cards might be free of charge, which were issued to the VIPs who have close relations with the investors.

L, a golf player, who has four membership cards of the golf courses in HCM City and Binh Duong province, said one would be not foolish enough to spend big money on membership cards. Nowadays, golf courses, in an effort to attract more guests, offer big preferences to visiting golfers. It would rather to spend $40 for each time of playing than spending big sum of money at once for the membership cards.

NLD