When you’re investing in golf property, you want a property that will earn its keep as long as you own it and that you can sell for a profit when you wish to free up funds. Here’s how to buy smart.
Golf travel is big business, with over five million golfers in Europe alone spending £1.5 billion (according to the Golf Research Group) on golf travel each year. Many property investors decide they’d like a slice of that money and buy a villa or apartment on a golf course – but simply buying the first golf property you see probably isn’t going to earn you a regular income.
You have to be prepared to put in some hard work: you have to work to fi nd the right property and work to market it to potential tenants.
A lot is currently being said about a slowdown in the Spanish property market. The value of investments can fall as well as rise, and whether you buy stocks and shares or property, there’s always going to be an element of risk. Nonetheless, one thing most property experts agree on is that highquality
property in good locations is always going to be in demand and so will hold its value better in a tough property market.
Look at the whole market
Location is a tricky matter when it comes to golf property. Property on the Costa del Sol and Mallorca is generally more expensive than property in Murcia or on the Canary Islands, on the golf course or off. However, the quality of a course has a big impact on the price of property too, no matter which province the course is in. Because of this, it’s best to look at as
many properties as you can that match your budget without settling on a particular region of Spain at first. Likewise, don’t narrow your property choices down to villa or apartment yet. Simply get a good idea of everything you can afford.
There’s one bit of narrowing down that you can do at this point: you can decide whether you’d prefer a resale property or an off-plan one. Resale properties are more expensive, but you do have the advantage of seeing what you’re getting, in terms of the golf course as well as your property, and you can start earning from it as soon as it’s got furniture in place. You don’t have to wait for a resale to be built before you see a return on your investment.
Once you’ve got a list of potential properties, look at the location of each. Where is the nearest airport to each property you’re looking at, and what level of service does it receive? It’s better to be close to an airport that receives flights from all around Britain from a number of different airlines than one that receives flights from only two or three British destinations served by a couple of airlines. It will mean there’s more opportunity for people to stay at your property, and your income won’t take a hit if one of those airlines decides to withdraw its service. Remember that while golf is a year-round sport, some airports receive signifi cantly fewer flights in winter.
The critical feature
Next, look at the facilities available at each course and in the surrounding area. Look at what’s actually been built and what’s been planned. A well-planned golf course is essential. If you’re buying into the extremely early stages of a project off-plan, will the golf course be fi nished when your property is? You won’t attract many golfers to your property if there’s nowhere for them to play.
Good golf facilities should be your primary concern when investing in a golf property: you’re aiming to appeal to those high-spending people for whom this sport is their primary reason for holidaying, not to regular tourists who might fancy playing one round during their week’s stay. An 18- hole course is the minimum to look for; further courses, a golf academy, golf shop and a driving range are all extras that will enhance a site’s appeal and will enable you to charge good rental prices.
If you can afford to buy on or near a course that hosts important tournaments or has a global reputation, such as Valderrama or Golf de Catalunya, you’ll benefi t from the publicity the course receives. You’ll also be able to charge premium prices during competition periods as golf fans will want to watch their heroes on the greens and fairways. While properties on such courses are expensive (at courses like Sotogrande and Valderrama, if you can get a property at all, two-bedroom apartments cost in excess of €500,000) you may feel the potential for premium rentals and the fact that these properties are likely to hold their value will justify the cost.
Property plus
Additional facilities will make your property appeal to golfers who are travelling with non-golfers – ‘golf widows’ and even ‘golf orphans’. Many high-class resorts have excellent spas where abandoned spouses can go for pampering. The spa at the Villa Padierna Hotel at Los Flamingos includes a thermae spa spread over 2,000 square metres, for example. Desert Springs’ Crocodile Club has jungle-themed play areas for children complete with a children’s pool, and even a mini-golf course. A location near an attractive town, which Arcos Gardens has, or a beach, like at Roda Golf and Beach Resort, will help attract paying guests. If you’re buying on one of the new golf resorts out in the countryside you will need to make sure the course you’re buying on offers excellent golf plus a complete holiday experience as facilities outside the development may be limited.
By this point you should have narrowed your initial long list of properties within your budget down to rather fewer that are within easy driving distance of an airport that receives good numbers of fl ights from the UK, have great golf facilities and offer other amenities too.
Now it’s time to hit the internet and see what other owners of rental properties at the golf resorts you’re still considering are charging. This will give you a good idea of how much you’ll be able to charge for your property and how much competition you’re likely to face for tenants. If you’re buying off-plan, you can also use the internet to check the developer’s track record and other buyers’ experiences of the development. Does the developer have a history of altering plans (squeezing extra apartment blocks in where a swimming pool should be, building undersized apartments, changing orientation of properties)? Are people fi nding it difficult to get bank guarantees? No matter how attractive a development looks on paper, if these things apply to any property on your short list, reject it. If a development fails to be built with all facilities as promised, the value of your investment could be affected badly.
You should be down to a shortlist of properties by now. At this point you can bring your personal taste into things and choose which development to buy on. Bear in mind that quality and location are what help a property hold onto its value, so it’s better to purchase an apartment with high-grade fi xtures and generous terraces on a renowned course than an average villa crammed on a tiny plot on a bog-standard course.
Before you hand over any money to a developer or estate agent, though, get your lawyer to check that the project has planning permission and building licences and, if it’s a multi-phase development, check that there’s full planning permission and building licences for all communal amenities.
Ownership details
Once you’ve bought your property you’ll need to manage it. If you don’t live near your property, you’ll need to employ a property management company to clean and change bedding between guests, hand out keys and so on. It’s a neccesary evil, but it will affect your profits.
Because you’re aiming to appeal to golfers, when you market your property, remember to include details of the course it’s on. As well as such things as the number of holes and the par, let potential tenants know whether the course has a dress code or handicap level and how much they’ll have to pay to play there. If there are extra golf facilities, list them.
If you’re a British resident and your tenants who pay you are also in Britain, paying in sterling, because the property is in Spain you’re still liable for Spanish income tax, and you have to declare your rental income in Britain too. Because Spain has a double tax treaty with Britain, the taxes you pay in Spain will be offset against those you’d pay in Britain. See page 138 for a breakdown of other taxes that you will be liable for.
As a non-resident earning an income in Spain you have, by law, to employ a fi scal representative to act as a contact for you and make payments. If your tax matters aren’t complicated, a gestor (a professional administrator) is cheaper to employ than a lawyer and can deal with licences and all manner of Spanish bureaucracy for you on top of sorting out your taxes. Now you’re ready to enjoy the benefi ts of owning a golf property!