November 2008 - Robert von Hagge
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Amentizing Your Development
Robert von Hagge, Senior Partner / Architect, von Hagge, Smelek & Baril
Often times its “damned if you do and damned if you don’t.” Well it’s usually never “damned if you do,” with one important caveat, and that is to undertake to create first class homework before you launch into a resort/residential development anytime, anywhere! If you already own the subject property that you have always dreamed about developing as a resort, perhaps with a residential club component; you at least have what represents some upfront bargaining strength by virtue of owning the land. Obviously your ownership provides strong influence when talking to lending institutions regarding their providing development financing. If you are looking to purchase land for your dream, the following advice is even more critical.
To reiterate, preliminary discussions with lenders should only follow a professional land plan and a reliable project feasibility and market study as key elements in the all important Business Plan. That plan clearly defines “what can I expect to do with my property and will it be financially worthwhile”? This document must be clearly and responsibly set forth on projected conclusions on a host of levels ranging from information regarding environmental impact studies through a series of other studies and the status of various permits on to other material issues like securing a solid, dependable water source, etc. When all issues and determinations are finally in place and thoroughly defined, and the study has a positive conclusion, you realize that you can amentize your proposed development. Be assured that the chosen amenity will often, strongly assist the marketing effort and therefore your bottom line profit. Further, the prescribed amenity should be able to stand alone and financially sustain itself beyond the measure of its established force and value as a marketing enhancement for the development.
I design golf courses. It follows that the amenity I favor is the introduction of a premiere, world-class golf course integrated into the planning of a resort and/or residential community. If established correctly, a premiere, landmark golf course facility will undoubtedly enhance the image and the value of investment appeal for a resort, especially with a companion residential community. When residential real estate is involved and the resort or country club image is carefully crafted, the leveraged property value multiple for the affected inventory can often soar up into the sky! Major golf courses have repeatedly proven that they can create strong real estate values and customer demand second only to ocean-front and/or pristine lakeshore properties. On very rare occasions, the opportunity to combine golf and ocean or lake views for residential inventory will present itself. We had that opportunity when we created the White Witch golf course for the Ritz-Carlton Hotels near Montego Bay, Jamaica. The Caribbean Ocean can be seen on 16 of the 18 holes and from 70 percent for the residential inventory. In Mexico, we are also presently involved in the total planning and the golf course design for two outstanding oceanside properties. The first is located on Costa Alegre south of Puerto Vallarta and the other is located near La Paz fronting on the Sea of Cortez. Coastal properties that are still reasonably accessible are rare and may soon disappear altogether due mostly to the advancing and more stringent environmental permit processes, worldwide. However, there exist hundreds of highly successful golf course amenity developments that have been carefully created inland on all continents and often on very ordinary, unexciting physical properties. They successfully exist because the developer carefully indentified whether or not his dream could become a reality. Further it predicted what he could actually realize and physically develop because he initially engaged the appropriate professionals to provide the research and feasibility that precisely identified the project and directed him toward the appropriate product and economic market level to pursue.
I can think of a number of past development disasters. In almost every situation, the history of the project revealed the lack of initial expert homework and it follows the absence of sound, reliable research and feasibility information. I am very thankful our company’s name has never been associated with that “disaster” list. The creation of premiere, world-class golf courses integrated into the development will definitely provide the developer with the instrument needed to establish the proper marketing image for his undertaking. Properly done, it will simultaneously escalate real estate values often far beyond project proforma projections. It is extremely important to recognize that worldwide, 63 percent of all purchasers of golf course real estate do not play golf. They buy and live there because of escalating property values; and, more importantly their country club, home address often speaks to and validates their social and professional, life achievements. Their prestigious country club address becomes their important social pedigree. For a developer not to understand this “snob appeal mystique” often results in his leaving lots of money on top of the table. Therefore, the golf course physical statement must represent absolute visual beauty. It is commonly accepted that all the great courses throughout the world are simultaneously and uniquely the most beautiful courses.
In the final analysis, the most successful amenity developments are really a special form of high-level show business and if carefully crafted, they can create windfall profits.
Robert von Hagge
011-52-552-623-0325
rvonhagge@vonhagge.com
www.vonhagge.com