In a move that some have described as revolutionary for golf-happy Spain, the regional government of Andalusia recently approved a sweeping new law restricting the development of golf courses.
The regulations, approved in February after months of heated debate, dramatically limit the number of houses that a developer can build around a course and require new courses to use recycled water for irrigation.
Throughout the country regional governments are approving similar measures in what is largely seen as a backlash against rampant golf course development. More than 100 courses have been built in Spain in the past eight years, most accompanied by high-density residential developments targeting foreign buyers. “I don’t have anything against golf,” said Juan Area, editor of El Observador, a newspaper here. “But I think there are too many golf courses.”
In Andalusia - home to the popular Costa del Sol, which is sometimes called the “Costa del Golf” - there are 118 courses, accounting for more than a third of the courses in the country. Nine new courses opened in the past four years alone, according to data from Real Federación Española de Golf, an industry group.
Critics say the golf courses were used as a Trojan horse, employing fairways and greens as an excuse to build rows of villas on environmentally sensitive land. “Probably in the last 10 years there have been more houses than golf,” said Ramón Dávila, president of Promotur, a tourism group in Andalusia. “And the government wants to re-balance this relation between the houses and golf.”
The debate over golf courses coincides with a steep downturn in the Spanish housing market, which is sending ripples through all sectors of the economy. During the first part of 2008, the number of home sales in Spain fell by 30 percent, according to government data, and estate agents report that house prices have dropped 10 percent to 20 percent in many tourist areas.
Many Spaniards see golf courses as a symbol of all that went wrong in the property boom. In many cases, developments were fueled by foreign investors who bought up housing units off plan, before the start of construction. Now industry experts say there is a glut of golf course villas and many of them are sitting empty, helping to drive down prices throughout the country.
“Investors are trying to exit their investments and they’re not being able to,” said Mark Stucklin, who tracks the market for his Web site Spanish Property Insight.
By one construction industry estimate, there are more than 650,000 unused new housing units in Spain, including the houses built for the tourist market. In some areas, local officials are working with developers to use empty units in golf course developments as subsidized housing for Spaniards who cannot afford the high price of new homes.
Meanwhile, golf courses and their accompanying housing developments have been at the center of the debate over water in southern Spain, which is prone to severe droughts. “Agua para Todos,” or “Water for All,” is an oft-repeated slogan in many parts of the country. “Golf courses are extremely thirsty,” Stucklin said. “They take up a lot of space and a lot of water. It’s inevitable that there would be more regulations.”
In Andalusia, the new regulations will treat most new golf course projects as sports facilities, not residential developments, and limit the number of houses to 10 per hectare, or 2.5 acres, in many cases.
“We want to put an end to the relationship between golf and construction,” a government spokesman, Gaspar Zarrías, told The Olive Press, a local publication, when the new law was approved. “We do not want to see 17,000 homes with a large garden with holes in it.”
Without the housing element, many believe the new regulations will make it economically unrealistic to build new courses, at least for now.
“Houses with golf will become a scarce commodity on the Costa del Sol,” said Sipke Feenstra, chief commercial officer for La Perla International, a developer based in Amsterdam.
La Perla is building Monte Mayor Golf and Country Club, a residential development with houses priced between €550,000 and €5 million, or $855,000 to $7.76 million, in Benahavís, an inland area of Andalusia where there already are nine courses.
Andalusia has been “over-enthusiastic with building permits,” Feenstra said. “It’s a good thing to put more regulation to control the supply and quality.”
At the same time, the competitive landscape is changing, analysts say. With hundreds of projects in sunny locales around the world offering gleaming fairway-adjacent luxury villas, golf is obsolete as a driver of residential development, said Miguel Pinto of research firm Grupo i, which tracks the Spanish property industry.
“Golf is not enough,” Pinto said. “It’s necessary to compliment the offer with other attributes,” like marinas, equestrian centers, spas and health centers for seniors.
But few believe that golf course development in Spain will grind to a complete halt. “Spain is undoubtedly the strongest demand market in western Europe,” according to a recent report by KPMG’s Golf Advisory Practice, which tracks the market. Since 2000 the number of players affiliated with clubs in Spain has doubled, to about 300,000, said Andrea Sartori, head of the golf practice.
Despite the housing slowdown, there are still dozens of projects in the advanced planning stages, many in inland areas where there are relatively few courses.
“I personally think these regulations will have no impact whatsoever on golf course development long term,” said Mark Roulston, editor of The Olive Press. “Yes, there will be an element of strictness now but the developers are powerful, with a lot of money, and money talks.”