Published January 24, 2009

Membership prices of top clubs plunge

Mid-tier golf clubs hold firm and prop up BT Golf Index


IF open-market prices of golf club memberships are a leading indicator of its health, there is little doubt the economy is in for a rough ride.

The BT Golf Index, which tracks open-market indicative prices for Singapore club memberships, has sunk for a sixth straight month to its lowest level in more than two years.

At 144.03, it is 5.51 points down from the previous month and 16.28 points or 10 per cent lower than a year ago.

And that is just the topline index, which has been held up by the relative resilience of mid-tier clubs. The story for top-tier clubs is much scarier.

Indicative prices for upmarket establishments such as Singapore Island Country Club (SICC), Tanah Merah Country Club (TMCC) and Sentosa Golf Club have fallen as much as a third from 2007 and early 2008.

The asking price for the 72-hole SICC is just above $140,000 - a level not seen for more than two years. The price was over $200,000 just 18 months ago.

Sentosa is now trading at half of its lofty height of $300,000 two years ago. TMCC, at $120,000 now, is the cheapest of the 'big three'.

Mid-tier clubs seem to be faring better.

For example, Orchid Country Club, which recently reopened its third nine-hole course, is holding up at $35,000. Raffles Country Club and Jurong Country Club are steady at $40,000-$45,000, and Laguna National is firm around $60,000.

But the number of transactions has dwindled, and brokers expect the prevailing price weakness to last a while. This is because the two factors that determine demand - incomes and job security - have decayed over the past three to six months.

This has had a brutal effect on the clubs in the top tier - and for good reason.

Membership of SICC, Sentosa and TMCC has always been coveted by high-flying financial types, particularly expatriates. And these people have been among those worst hit by the financial crisis and economic downturn. Many have seen their salaries and bonuses slashed. Others have lost their jobs and gone back home. And more will follow.

Credit Suisse said in a report this week: 'Singapore's overall population could fall 160,000 to 4.68 million as 200,000 foreigners leave the country during 2009-10.

'The potential drop in employment and population would have far-reaching implications for the economy. Private consumption could contract in both 2009 and 2010, the unemployment rate could reach 5.6 per cent in 2010 and the private residential vacancy rate could hit 15 per cent in 2010.'

Indeed, given that this is turning out to be Singapore's worst post-independence downturn, few will be tempted to plough valuable cash into golf memberships. And that being the case, don't expect a rebound in prices any time soon.