STATE OF THE MARKET
It's always interesting to review market indicators. In the golf course industry, we measure performance by cap rates, discount rates and Gross Revenue Multipliers. As shown in the adjacent and below graphs, courtesy of the Society of Golf Appraisers (SGA) 2016 market survey, the value of golf properties has improved slightly since 2009. Cap rates have improved from around 12% at the height of the recession to approximately 10.5% on average now, with discount rates making only slight improvement. Conversely, mortgage interest rates, according to the SGA study have remained between 7% and 8% since a high in excess of 8% in 2009.
Gross Revenue Multiples, how many buyers evaluate golf properties today, on average have remained steady around the 1.5 mark, however the range has varied from around .5 to in excess of 4.0. It should be noted that these multiples are quite sensitive to a propety's net income levels and many buyers still seek propeties in the 1-1.25 range.
We often read surveys from some that values of golf courses are rising rapidly. In some cases, where a property's financial performance has improved, it's value and potential sale price will react accordingly, however the risk level perceived in golf course properties appears to be steady with slight improvement.
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