Developers and golf operators are pouring money into new clubhouses, enhanced recreational opportunities and new restaurants. Driving the market is a flood of buyers from California, many of whom are looking to get away from the state’s high taxes. “There’s a degree of urgency that we haven’t had in this market before,” says Rich MacDonald, owner of Dragon Ridge CC.
A successful luxury golf course community these days really isn’t about the golf, Rich MacDonald told Nevada Business Magazine. Instead, the owner of DragonRidge Country Club in Henderson, Nev. said the golf communities that thrive are those that deliver opportunities for strong social connections—times for members to mingle over a glass of wine, share a laugh over a good dinner, stretch during a group session of yoga at the clubhouse or meet up for early-morning tennis.
MacDonald isn’t alone in widening the focus of his golf-oriented community, Nevada Business Magazine reported. Across the state, developers and golf operators are pouring money into new clubhouses, enhanced recreational opportunities and new restaurants.
The surprising upshot is, even in a weak environment for golf, many luxury communities around golf courses are doing just fine, Nevada Business Magazine reported. At DragonRidge, for instance, MacDonald is pushing to get an additional 200 residential lots ready for sale as quickly as possible. About 600 lots in the community already have been prepared for the market at prices generally in the $1 million to $3 million range.
Driving the market is a flood of buyers from California, many of them looking to get away from the state’s high taxes, Nevada Business Magazine reported. That segment accounts for about 70 percent of buyers at DragonRidge, MacDonald said.
Unlike relocating buyers in the past, who sometimes bought a lot and then waited a couple of years before building a home, today’s buyers from California want to get moving right now, Nevada Business Magazine reported.
“There’s a degree of urgency that we haven’t had in this market before,” MacDonald said.
It’s a story that’s repeated at luxury golf communities across the state, Nevada Business Magazine reported. In Reno, the Club at ArrowCreek, owned by businessman Raymond Conrad, is in the midst of a $40 million renovation that will double the size of the club, add recreational facilities ranging from swimming pools to pickleball courts and upgrade restaurant, banquet and wedding facilities. The project is scheduled to unfold over about 30 months.
Morgan White, president of the ArrowCreek Homeowner’s Association, said Conrad’s investment in the club reflects widening interests of the people who live in more than 900 custom and semi-custom homes around its two golf courses, Nevada Business Magazine reported. Home prices range from about $700,000 to more than $2 million. While most of the 1,084 lots at ArrowCreek have been developed, about 15 homes are under construction.
“It’s just anecdotal, but it appears that ArrowCreek is attracting more families with kids,” White said. “They are moving here, not only for the golf, but for the good schools, the security of a gated community and the quality of life.”
Membership in the development’s private golf club is optional, and about half of ArrowCreek residents have signed on, Nevada Business Magazine reported. People living outside the club also can join, and outsiders account for roughly 50 percent of the membership of the Club at ArrowCreek.
A few miles from ArrowCreek, another gated luxury golf community also has completed big investments to ensure a strong future despite the decline of golf’s popularity, Nevada Business Magazine reported. Montreux Golf & Country Club, a residential community that surrounds a Jack Nicklaus Signature Course at the edge of the forest above Reno, has seen 21 percent growth in the pace of closed transactions so far this year compared with 2018.
Brooke Sullivan, a Dickson Realty luxury home specialist who has worked at Montreux since 2002, told Nevada Business Magazine this year’s average sales price—just under $2 million—is running about 7 percent over last year’s numbers.
While more than half of the homes sold in the community this year were priced under $1.5 million, Sullivan notes that buyers appear to have an increasing appetite for upper-end homes, Nevada Business Magazine reported. Three Montreux properties have sold for more than $3 million this year with the most expensive selling for $4.75 million.
The community’s location at the base of the Sierra—near Lake Tahoe and near urban amenities—provides a strong draw for California residents looking to escape the high-tax state, Nevada Business Magazine reported. In fact, Sullivan said, Californians account for about 65 percent of homebuyers at Montreux.
“They love the tax savings, but they also come for the quality of life—less traffic, beautiful weather, no rolling blackouts and more spending power,” Sullivan said.
To maintain its competitive position in the gated luxury golf residential market, Montreux recently completed a multi-million-dollar transformation of its 34,000-sq.-ft. clubhouse, Nevada Business Magazine reported. While the golf course is clearly the centerpiece of Montreux, Sullivan said other programs at the clubhouse—fitness classes, kids camps, hiking and book clubs, cooking classes and wine dinners—are equally important to residents’ experiences.
“Through the years, I’ve had many clients tell me that they have made more friends in Montreux in the first six months of moving to the area than they made during a lifetime in California,” she said.
The Howard Hughes Corp, meanwhile, has watched the decline in golf’s popularity and downshifted the importance of golf-related projects at its Summerlin community, Nevada Business Magazine reported. When Howard Hughes Corp. created its original master plan for Summerlin in the late 1980s, golf courses were key elements of the community. But times have changed, said Kevin Orrock, the president of Summerlin.
“Over the past few decades, the popularity of golf courses has been on the decline,” he said. “Generally speaking, golf’s decline started during the recession, creating a five- to 19-year window where younger players were not being introduced to the game. Now we are seeing the result of that. Players who were in their 50s then are now playing less.”
Across the United States, about 24.2 million people played golf in 2018, according to the National Golf Foundation. While the numbers appear to be stabilizing, participation still is about 20 percent below its levels in 2003. Nevada courses, many of which draw heavy business from tourists, haven’t felt the worst of the decline, Nevada Business Magazine reported. Even so, a handful of course closures—such as Henderson’s Black Mountain—have vexed neighbors who worry about plans to redevelop the land once devoted to golf.
The weakness in the sport is reflected in the history of golf-related development at Summerlin, Nevada Business Magazine reported. With the exception of The Summit, which opened in 2017, most of the courses in the community were built in the 1990s and early 2000s when development of golf courses and related residential communities was at its peak.
Now Summerlin executives don’t have immediate plans to add to the 10 golf courses—some public, some private—that golf course developers already have created in key locations throughout the community, Orrock told Nevada Business Magazine. Still, he said existing golf communities are doing well. With the Jack Nicklaus-designed Bear’s Best Las Vegas as its centerpiece, The Ridge is nearing a sellout of its 735 custom and high-end production homes.
The Summit, another neighborhood that’s a joint development of Discovery Land Co. and The Howard Hughes Corp., has sold more than 70 percent of its estate-sized multi-million-dollar lots, Nevada Business Magazine reported. The golf course at The Summit, open exclusively to homebuyers in the community, opened in 2017. That was early in the development cycle and helped drive residential sales.
Even though golf has lost some of its popularity, golf-course communities remain popular among buyers who like the aesthetics of living near the green open space of a course, Orrock told Nevada Business Magazine.
“And,” he adds, “in Southern Nevada, living adjacent or near to a golf course means cooler temperatures, a real benefit in the desert.”
Montreux was established in 1997, and its development team uses the development’s track record to distinguish Montreux from newer communities, Nevada Business Magazine reported.
“Montreux is in its final build-out, not just starting, People looking to buy in the community are not crossing their fingers that a clubhouse will eventually be finished one day, as is the case with many new communities.” Sullivan said. “It has weathered multiple economic cycles and is solidly tested investment.”
Historically, MacDonald said, homes in golf-course communities have proven to be better financial investments than other luxury homes, Nevada Business Magazine reported. Researchers at Florida Atlantic University concluded a couple of years ago that the value of homes near golf courses runs 8 to 12 percent higher than similar homes elsewhere. But that comes with a risk. Industry consultants say home values typically fall by about 25 percent if the nearby course closes.
Although The Howard Hughes Corp. doesn’t have current plans for new golf-oriented developments at Summerlin, the company hasn’t entirely closed the door to partnerships with golf-course developers, Nevada Business Magazine reported.
“We still hold entitlements for golf courses in our master plan and may consider a course given the right opportunity and circumstance as we continue to build out Summerlin’s remaining acreage,” Orrock said.
Along with the economic issues created by declines in golf participation, MacDonald said water-related political issues will discourage development of new golf developments, Nevada Business Magazine reported. As community leaders face tightening water supplies, irrigation of new golf courses is likely to be a low priority.
“I don’t see any more golf communities being developed here for a long time to come,” he said.
For owners of existing homes near golf courses, that may be good news over the longer term, Nevada Business Magazine reported. MacDonald notes that little new development will put a cap on new supplies of golf-course residences, helping support values of existing homes.