Fore! Sale

Golf Courses Are Hot Real Estate.

December, 2001

When Towne Development of Hawaii Inc. reopened the Makaha Resort Golf Course on Oct. 5, more than one year after purchasing the 330-acre property from ANA Hotels Inc., the response from the local community was overwhelming. Golfers played a daily average of 200 rounds for two consecutive weekends, while occupancy at the 196-room hotel easily hit 90 percent. “Our business plan was to go after the kamaaina people,” says Christopher Lau, president of Towne Development.

So far, that business plan has been a success. Perhaps that is because the hotel touted special room rates for as low as $65. Or, perhaps nostalgia may have had something to do with it. “A lot of people remember when the hotel was a Sheraton, they either went to the resort with their parents, or with their own kids,” Lau says. Makaha Resort, a part of the Waianae Coast for generations, was built in 1969 by the late developer Chinn Ho.

Golf-related real estate is a whole new ballgame. “The players are different,” says Douglas Pothul, senior vice president of Colliers Monroe Friendlander Inc. “The golf course itself is not looked at as a profit center. The profit is made in developing the commercial and residential land around it. That’s where the money is.”Makaha’s new ownership comes at a time when investors have bought, or are looking to buy other golf resorts in Hawaii. But the market hasn’t exactly been free of obstacles. The challenge? The economic downturn, combined with the fact that Hawaii is saturated with golf-related activities. “There are so many new golf courses – the demand in the early 1990s is different from now,” Lau says. In 1989, there were 56 municipal and private golf courses (936 holes) in the state, according to the Department of Business Economic Development and Tourism. Today, Hawaii is home to 77 courses (1,496 holes).

Makaha’s previous owner ANA Hotels purchased the resort in 1979 for $9.5 million and in 1982 turned over hotel operations to Sheraton Corp. The hotel closed six years ago, but the 18-hole golf course stayed open until Towne Realty agreed to buy the property in October 2000 for an undisclosed price.Towne Realty knew there was potential money in Makaha Resort. The company renovated 96 of the hotel’s 196 rooms, replaced about 100 golf carts, renovated eight ponds and refilled the sand traps with more than 400 tons of new sand. The price tag for the makeover: $3 million.

Another course that recently went off the market is Luana Hills Country Club, which HRT Ltd., an entity of the Maryland-based Harry & Jeannette Weinberg Foundation, bought last December for $12 million. The buyout included the 19-hole course and clubhouse on 1,064 acres of land. Luana Hills’ previous owner, Japan-based Pan-Pacific Development Inc., in 1995 bought Luana Hills from Y.Y. Valley Corp for an estimated $35 million.

In early November, the Honolulu Country Club went on the market for $16.7 million. The daily-fee public course, located in central Oahu, was built in 1957 on 136 acres of fee-simple land. Its owners are a subsidiary of Japan’s Sumitomo Bank plus a group of 28 local investors. Unlike other courses on the market, however, this one has the potential to be converted into a private, members-only facility. HCC was built years before the local government required that all new golf courses must be open to the public.

Colliers Monroe Friedlander is the agent for two golf resorts, Pukalani Country Club on Maui and Kiahuna Golf Club on Kauai. Both facilities are owned by Japan-based Sports Shinko. Kiahuna’s $42 million price tag includes an 18-hole course, pro shop and driving range on 144 acres of land, plus 176 additional acres that can be used for residential development. The $29 million Pukalani Country Club also comes with developable parcels, specifically zoned for a future hotel and apartments. On the 225-acre Maui resort is a 500,000-gallon, fully operational sewer treatment plant. Such features will draw potential investors. “Our goal is to try to position it to where a buyer will say ‘I can do better than that guy,’” Pothul says.

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Cathy S. Cruz