Is golf in the Middle East a business yet?

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The United Arab Emirates is ahead of other Middle Eastern countries when it comes to golf. And despite it not being the place from where the golfing industry in the Middle East kicked off, a recent report by KPMG Advisory shows that half of available golf courses in the region are in the UAE, followed by 15 per cent in Saudi Arabia and five per cent in Qatar, Lebanon, Syria, Kuwait and Bahrain.

KPMG's report cited 20 regular grass courses in the Middle East, while the number of golfers was estimated at 17,000, making the golf participation rate of 0.026 per cent particularly low when compared to the rate in Europe.

The UAE golf market represents the most sophisticated in the region, says Greg Sproule, Managing Director of sports media and entertainment company IMG, which is involved in showcasing Abu Dhabi as a golfing destination. This sophistication comes from the UAE's appetite to be seen as a major venue for sports events and is best seen in the efforts that have gone into growing the country's profile and its sophistication around the world.

Leading the way

Dubai is currently leading the way in the industry, with Abu Dhabi following its steps towards establishing itself as a well-recognised golf destination. In Dubai, between 270,000 and 300,000 rounds are played annually, despite the fact that one of the main courses - the Sand Golf Course - is closed. The number of courses available in the country is still very small, but with so many new courses under development, hopes of significant growth for golf are high.

The situation reminds Mark Chapleski, Area Managing Director of Troon Dubai Office, of Las Vegas in the mid 1980s. 'Las Vegas wasn't thought of as a golf destination, but rather a place for gambling and entertainment. The place started with only eight courses, but since people wanted to do other activities, they started developing golf and in less than 20 years, 60 golf courses were in place. This is a tremendous growth and I don't see any reason why the UAE shouldn't have up to 20 courses by 2015.'

At present, Dubai is witnessing the development of Jumeirah Golf Estates, with two courses under construction and two others being planned. Another course is being built in Dubai Sports City, in addition to Tiger Woods' first ever course being developed in Dubailand by Tatweer real estate company. In Abu Dhabi, the Saadiyat Island project has two courses under development with plans to extend that number under study now according to Chapleski. At Al Ain in Abu Dhabi, Al Qudra is also building a course as part of a real estate development.

Outside the UAE, Qatar has one golf course, as does Bahrain, which is also developing two additional courses within the Durrat Al Bahrain project. Jordan is also establishing golf courses within the Ayla Oasis project in Aqaba while Sodec Egypt is developing its high end course which will be added to the 16 existing courses in the country. Coming to Oman, the country is due to open two courses by the end of 2008 with further plans on the way.

Interpreting the slow development of golf in the GCC, Mohammed Buamaim, Vice President and CEO of Golf in Dubai, claimed that the benefits of developing golf are not well recognised in the region, especially because it is over such a long time.

'We hear of building courses in the Middle East but none of these are happening mainly because developing a golf course is very expensive and the return from it is a long termed one that has to be combined with other benefits. I think this is a business that the government needs to support in any place in the world because its benefits are related to other sectors such as hospitality, tourism and retail.'

Chapleski, agreed with Buamaim's long-term view, saying that starting a golf business costs between $30m and $40m, yet recouping those costs will be over a number of years. Hence the reason coupling golf courses with real estate has becoming so popular.

Profitable business

According to KPMG's report, annual membership fees in the Middle East were around $3,741 per individual in 2007, with fees in Dubai seven per cent higher.

Obviously, real estate, tourism, retail and hospitality are the big winners in the golf industry. 'In order for one golfer to come and play one round he needs to fly in, he has to stay two nights at least in a hotel, he has to eat and sometimes buy a shirt and shoes, and that in itself has an added value,' said Buamaim.

Golf revenues, including food, drinks and retail, reached $6.7m in 2007, with revenues at Dubai courses hitting $8.8m.

Water issue

Challenges that face the golf industry vary, depending on the geography. In the Middle East - and specifically in the gulf region - water and irrigation is a big issue.

Developing a golf course is land intensive, water intensive, capital intensive and time consuming. Water is more critical for the UAE, where there is no rainy season. The solution hit upon by larger developments that include housing units and hotels is to use grey water - reusing 'clean' waste water to irrigate golf courses.

'The responsibility of the golf community in the world is to be environmentally sensitive and responsible, and all developers that we have been involved with share this responsibility. Fortunately, the development of courses today doesn't need potable water for irrigation purposes and there are many ways to be conservative with the amount of water used, whether by minimising the grass area or by using effluent water after treating it again,' Sproule said.

Chapleski sees that pricing will be an issue in the long run, because everybody is building high-end courses that are too expensive for even the middle class. A solution would be the government providing land that can be used as golf courses, which can then be priced for the local market.

Marketing golf… in Dubai

The key thing about the golf industry in Dubai is that it started as another way to promote the emirate. First on the scene was Emirates Golf Club in 1988 - at that time in the middle of the desert but now part of the thriving and sprawling Emirates Hills development. It was launched with a heavy marketing programme in the UK.

At that time the European tour was young and in search of new frontiers and it picked Dubai. That decision brought Dubai as a golfing destination to the attention of the world and helped bring about other developments, such as the Montgomerie, Dubai Creek and Arabian Ranches.

Experts see that Dubai's marketing approach is a leading example on how to put yourself on the world map. And this has extended to Abu Dhabi today, which boasts the Abu Dhabi Golf Championship in its golfing calendar.

Sproule is a big believer in holding large, annual golf events, which bring with them television, top golfers and fans of the sport - and promote the emirates as a golf destination. To that, he added the airlines and hotels as important partners in the marketing of golf.

'Putting together a hospitality programme with a golf tournament is a powerful tool through which the sponsors of the tournament can bring in their best clients from around the world to experience the beauty of the place, stay in the great hotels and play golf,' he explained.

What's on for tomorrow?

Other than building high end courses, organising tournaments, and promoting golf outside, what can Middle Eastern countries do to further their golf business?

Sproule's answer is segmentation, establishing what's known as 'pay for play golf'. He believes this concept will give everybody access to affordable golf and should mainly target the locals.

And while he admits that it's great to have private high-end clubs that play a big role in the property equation, pay for play golf will further deepen access to the game at all levels and help attract tourists at the same time.

So far though, no one has taken this concept on board. So until then, the UAE will continue to see an increasing number of luxurious golf clubs that are connected to real estate and top business around the region.