Is it a good time to buy a club membership?
LIKE a golf ball whacked harshly with a six iron, club memberships have hit dizzying heights recently, in tandem with rising prices for property and other assets.
Lorna Tan, Finance Correspondent
Sun, Aug 05, 2007
The Straits Times
Soaring fees are par for the course at premier golf clubs such as Sentosa and the Singapore Island Country Club (SICC).
At Sentosa Golf Club, transfer membership fees have hit a record of $245,000, up from $146,000 a year ago. SICC's fees are now $225,000, up from $161,000 a year ago.
Still, some clubs buck the trend and not without reason. Membership fees at social clubs Arena, Fairway and Superbowl have stayed stagnant because their land leases are expiring soon.
Though prices are at record levels, experts still see potential upside to jumping on the club bandwagon.
Membership brokers expect fees at Sentosa Golf Club to hit $350,000 once the upcoming integrated resort (IR) on the island makes its presence felt.
The addition of a new $60 million clubhouse at SICC's Island location on Upper Thomson Road is expected to lift its appeal. This could send fees up towards $300,000, said Ms Fion Phua, the sales director for club membership broker Tee Up Marketing Enterprises.
Ms Phua tipped Keppel and Warren as being good golf club buys because their transfer fees are lower.
The owner of club brokerage Singolf, Ms Lee Lee Langdale, believes 'it is never too late to buy'.
'All the clubs are good buys in the Singapore context, depending on the buyer's needs for golfing and other country club facilities for his family,' she said.
Price variations reflect the quality of the courses, facilities and location.
But Ms Langdale and Mr Brian Goh, a senior vice-president at ipac financial planning Singapore, don't see club memberships as a financial investment.
'Chances that membership rates will increase might look good now, but it is a gamble. Further, with the monthly fees, you're looking at negative cash flow, which may last for a while if prices remain flat,' said Mr Goh.
Instead of buying a membership in a club now, you could invest the money in a well-diversified portfolio that would eventually allow you to buy a membership at an even more exclusive club as well as send your child to university overseas.
Meanwhile, golf at Bintan or across the Causeway.
Chief executive Chris Firth of wealth management firm dollarDEX believes that, as long as the economy is booming and the stock market doesn't crash, club prices will keep rising.
However, if you're buying a membership for speculation, there are cheaper, better ways to make money, like buying stocks or funds.
'It's a lot easier to buy, hold and sell a stock,' said Mr Firth, who is a member of The British Club and Raffles Town Club.
'And it is not as expensive to transact as club memberships, which come with transfer fees. If no one wants to buy the membership, you could be stuck with it for years.'
For those who are still keen on getting a club membership, here are some tips:
Affordability
Pick a club that is within your means. Factor in the monthly financial commitment needed to maintain the membership. Include subscription fees and food and beverage levies.
Transfer fee
Find out what the club's transfer fee is as it will affect the membership's resale value. For instance, if you buy a membership at $23,000 and the transfer fee is $3,000 and the goods and services tax (GST) comes to $210, you would have to sell it for $26,210 just to break even.
Don't forget the agent's fees, which range from $100 to 1 per cent of the membership fee.
High transfer fees sometimes deter buyers because they lower the returns, which would affect the investment value of the membership. In some cases, transfer fees can go as high as $32,100 inclusive of GST.
Location
A club near your workplace or home would allow you to get more mileage out of your membership.
You could drop in for a meal, a swim or a workout at the gym if the club is close by. If it is near your home, your spouse and children could also use the club facilities more often.
Facilities
Decide what you or your family like doing most and pick a club that best suits everyone. For instance, if you are a serious golfer, pick a club that offers golfing instead of just social amenities.
Alternatively, if you plan to visit a club with your family, choose one that offers facilities for everyone: for instance, a childcare centre, an Olympic-size pool, or jackpot and mahjong rooms for your parents.
Number of members
A club with too many members might mean insufficient facilities or longer queuing times for amenities.
Management style
Check if the place is a members' club or a proprietary one. The former allows you voting rights and a say in determining club policies. If the club is proprietary, find out if the management has a good track record in order to gauge the standard of service you can expect.