IF GOLF club membership prices can be used to gauge an economy's health, then Singapore appears to be in need of a medical certificate. Nowhere is this more evident than at Sentosa Golf Club, where prices have fallen by up to $80,000 over the past year.
Buoyed by the hype surrounding the redevelopment of Sentosa Island - with its integrated resort, Sentosa Cove residential development, its new marina and a string of boutique resort hotels, and the establishment of one of Asia's richest golf tournaments (The Barclays Singapore Open) - club memberships changed hands at $300,000 over the past year. Sellers were advertising to sell their memberships for as much as $320,000.
That was then. Today, the open market price for a Sentosa transferable local membership has "slumped" to between $220,000 and $230,000. And club membership brokers say that few are willing to cough up even that amount in current market conditions.
Sentosa is not the only victim of this crash.
Open market membership prices for Singapore golf clubs have fallen by an average of some 16 per cent over the past year as the widening global credit crunch hits asset prices across the board.
The BT Golf Index, which tracks the composite prices of selected club memberships in the open market, stood at 193.12 points this month - a massive 35.94 points down from the heady 229.06 level it had touched in September 2007. This is the biggest year-on-year slump in club prices in almost a decade.
In fact, all of the "Big Three" - Sentosa, The Singapore Island Country Club and Tanah Merah Country Club - have been hit hard, with prices falling between 13 and 19 per cent.
TMCC has seen its prices fall from $185,000 to $150,000, while SICC is down from $220,000 to $190,000.
And prices are continuing to soften.
"There are very few transactions at the moment," said Lee Langdale, who owns and operates club membership brokerage Singolf Pte Ltd. "When the stock market was roaring to new highs every other week last year, money was no object to many people. What is a few tens of thousands more for a desirable club? But today, the mood is very different."
And this sombre mood appears to be afflicting even the smaller clubs.
Orchid Country Club's open market membership price slumped some 27 per cent to $40,000, while Seletar Country Club fell 23 per cent to $49,000 and Keppel Club's price was down 21 per cent to $33,000.
And we may not have seen the bottom yet, say industry insiders.
"The market outlook is very weak," conceded an official of a prominent club which raked in several million dollars in transfer fees over the past year. "The appetite for club memberships has taken quite a beating, especially since May this year."
Not surprisingly, this decline tracks the Straits Times Index's 21 per cent decline from 3,250 points in early May, to around 2,560 points now.
Some market insiders note the similarities between the current scenario and 2001, when membership prices slumped following the dotcom bust. The depressing economic news and soft job market which followed inflicted significant damage to prices of golf club memberships which continued for the next two years. The biggest blow for club membership prices was when stock market investors started liquidating these assets to cover their contra losses and margin calls.
At the moment, we are still not at such a "distress" sale scenario. Brokers say that despite the sharp fall-off in the number of transactions, incomes remain stable and job security remains intact - for now.
But that said, a country club membership ranks low in the list of assets which people would retain in times of crisis. So if the prognosis for the financial markets is any guide, membership prices are unlikely to recover until well into the middle of next year.
This article was first published in The Business Times on September 6, 2008.
