Golf courses increasingly in the rough
Updated: 2011-09-20 07:16
By Shi Yingying (China Daily)
One day last month, chauffeured limousines, including a Mercedes-Benz, Audi S6, Lexus and Buick, brought a group of golfers to Firestone Golf Club in the booming coastal city of Shenzhen.
Stepping out into the sunshine, smiling and unpacking their golf equipment, they showed no signs of suspecting that one of their favorite recreation spots would soon be taken over by the Shenzhen government. Unknown to them, local officials had determined that villas at the course had been built without official permission and the land there had been put to an illegal use.
The central government has been keeping a watchful eye on golf courses since they started to become prevalent as the economy took off. They undergo inspection every two years.
The government decided in 2004 to ban the construction of new courses out of concern that large amounts of land and water were being consumed. That policy, though, has been to little avail.
Data from Beijing Forestry University's golf education and research center show that China was home to 570 golf courses by 2009. This represented a massive increase from five years earlier when 170 were in existence.
And of those new courses, only 10 were built with official approval.
The blatant disregard of the construction ban has led the government in recent years to place existing courses under stricter scrutiny.
Lin Han, a land-use planner in Shenzhen's urban planning, land and resources commission, land indemnification and farmland protection division, said a document arrived on his desk a few months ago, warning that the Firestone grounds were beginning to raise the eyebrows of inspectors.
"That was followed by a visit to Shenzhen by a national golf course inspection team on June 13 and an investigation by the Guangdong provincial department of land and resources from Aug 6 to 7," he said.
Lin said the scrutiny this year has been the strictest he can remember. "All of the owners of golf courses in China or other people in the business are holding their breath," he said. "For them, this is a matter of life and death."
A woman plays golf in 2010 at the first golf club opened in Binzhou, Shandong province. Playing golf has become a popular pastime for many wealthy people in the country. [Photo by Guo Zhihua / for China Daily]
Golfers at Firestone may be able to notice the 58 villas that stand on the course's grounds. But to do so, they must have sharp eyes; most of them are hidden by trees and thick foliage. It is those buildings, which the course owners are suspected of putting up without first acquiring the appropriate permits, that have raised the government's hackles.
And that is not the only reason inspectors are paying a little extra attention to the course. Also of concern to them is the fact that the land at Firestone was never officially designated as a golf course. It was instead set aside in 2002 for a project named The Guangming Public Sports Park.
"It somehow turned into a quasi-exclusive golf club three years later," said an anonymous Shenzhen resident in a quote that appeared in Southern Metropolis Daily in late August.
Feng Ke, director of Peking University's real estate finance research center, said most golf courses in China are built under the designation of country clubs or parks. Rarely do their official names or plans mention the word "golf".
"Nobody's going to yell out, 'I'm going to build a golf course' - it would be foolish to do that," said Zhang Xiaochun, the dean of Shenzhen University's college of golf, which is the only institution of its type in China.
He said golf courses tend to break even when they sell half of the year-long memberships they have available and to start making money when they have sold about 60 percent of them.
Even so, he said the golf business entails few risks. It's easy to make profits that are equal to between 8 and 10 percent of a course's revenue so long as "you pick the right spot to open up".
As for the illegal villas, selling them is often the best way to make money in the golf business, according to an owner of two golf courses in eastern Shenzhen who did not want to give his name. She said golf courses, despite their potential to make profits, are fairly expensive to run in China. The country, she explained, contains little terrain of the type that can be found in other places - the type that seems to have been made for the sport.
"Scotland, for example, is a natural golf course and it takes only about 10 workers to maintain a course there," she said. "We, on the other hand, have to hire at least 300 to 400 employees to take care of ours. That obviously increases our costs."
The investor said she had to spend about 20 million yuan ($3.14 million) a year to operate a golf course, an amount that mainly pays for labor, water, grass and pesticides.
Despite the cost, some find it hard to feel sorry for him. Li Zuolong, who sells golf villas, said golf courses almost always cause the prices of properties near them or on them to rise.
"About four years ago, we started to sell 56 villas that stood either next to our public golf course or a private course," Li said, noting that the average price of the villas was from 20 million to 30 million yuan each. "They're all gone now."
Cui Zhiqiang, former vice-president of the China Golf Association, said the price of a house that is near a golf course will be at least 20 percent higher than it would be somewhere else.
Attracted by the prospect of profit, investors and land agents are many times tempted to build villas near golf courses even if they don't have official permission to do so.
"Sometimes developers simply sell a golf course after all of the golf villas that are attached to it have been sold," said Li Hongyan, a reporter for a golf magazine who has written about the sport for more than five years.
Industry insiders who declined to give their names also said local governments have been known to turn a blind eye to the construction of illegal courses. Many officials see the projects, the insiders explained, as a way to attract wealthy residents to their communities.
Firestone is not the only course that has been threatened with punishment in the most recent round of golf-course investigations. In Shenzhen alone, Century Seaview Golf Club, Shenzhen Jiulongshan Golf Club, Shenzhen Longgang Public Golf Course, Beach Golf Course and River Golf Club appear on a list of six courses that are suspected of misusing land, according to Wen Huisong, who is in the city's urban planning and land supervision detachment.
Firestone, though, is under the most scrutiny of them all, Wen said.
"All of the illegal villas there are going to be confiscated and the golf course will be handed over to the local district's managing committee," he said.
If the owners of a course are found to have broken the law, their land and illegal gains can be confiscated. If the violations they are suspected of are serious enough, their case can be handed over to the courts.
When the Ministry of Land and Resources imposed the construction ban in 2004, it further tried to stymie new golf courses by stipulating that any proposal calling for the use of 66.7 hectares or more of farmland must have the State Council's approval to go forward. Yet, despite those measures, the following few years saw more of the projects being brought under construction than ever.
"This is to say, if we look at the ban on golf courses like we do the one-child policy, these 400 golf courses built after 2004 could be compared to babies that don't have official IDs - none of them is legal," Cui said. "The point, though, is: What are we going to do with them now? Are we going to eliminate them all?"
He said the 2004 ban brought a halt to the construction of golf courses that had been approved but not finished, as well as those that were both approved and under construction.
Industry insiders said the recent round of course inspections has come as a furtherance of the 2004 policy.
"From past experience, I'd say they will uncover a few illegal golf courses this time and punish them as a warning to others," said the manager of the State-owned Shenzhen OCT East Golf Club, who declined to give his name.
Zhang said he supports the central government's goals but said the best way to achieve them is not to refuse developers the right to build golf courses.
"We have gone from one extreme to another, from the laissez-faire policy of leaving golf courses alone before 2004 to the brutal refusal to allow any new golf project to go forward after 2004," he said. "We need something (golf-related laws or regulations) that is more rational."
Guilty or not?
On the other side of the story are a group Chinese millionaires - investors who have thrown billions of dollars into golf courses and now believe the 2004 ban is treating them unfairly.
Pan Zhongguang, CEO and president of the Orient Golf International Group, which owns and manages 13 golf clubs in China, said the current ban will only ensure that golf courses in China remain in the hands of a small number of owners. Those businessmen will come close to enjoying a monopoly over the sport, allowing them to charge players high prices.
"China is now home to 3 million golfers," he said. "This figure is expected to double to 6 million in five years and quadruple to 12 million in 10 years. If the government keeps slamming the door on further projects, golf will become a truly exclusive sport for the rich and powerful rather than a sport for all, despite the demand that exists for it."
Pan said anti-golf campaigns have arisen in Japan, South Korea and other countries, in part because "golf is usually introduced into a country by the rich".
But Pan believes golf will move along the same path in China as it has in many other countries and gradually cease to be an exclusive sport for the rich and powerful.
"Today in South Korea, it's very common for parents to teach their children golf," he said. "For them, knowing how to play golf well gives their children another way to rise into the upper classes."
In China, one basic law has slowed the construction of courses, Cui said: "The land is owned by the public."
"In foreign countries where the land is privately owned, you can be against golf but you can't make a law forbidding the construction of golf courses," Cui said. "In China, golf developers run into obstacles because of that basic difference."
Another source of the sport's difficulties, according to Zhang, is the unfortunate way it was introduced to China.
"It (golf) was called too many things like 'exclusive', 'luxurious' and 'an elite sport' by people who were overzealous to promote it," he said. "I've been telling them to make it less ostentatious and to say that golf belongs to everyone. But they wouldn't listen."