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Golf construction is booming in China, though it's banned

Developers use loopholes to skirt a moratorium on golf course construction. With local governments pocketing more money from land sales, there's little incentive to enforce the ban.

August 18, 2011|By Jonathan Kaiman, Los Angeles Times
  • The Mission Hills golf resort on China's Hainan island is larger than Manhattan. The island province is exempt from the government's moratorium on golf course construction.
The Mission Hills golf resort on China's Hainan island is larger than… (Gao Lin, Imaginechina )

Reporting from Beijing — The Citee Golf Club on the outskirts of the capital's smoggy sprawl is a kelly green oasis surrounded by neatly trimmed hedges and rows of luxury villas. At $77,000, a family membership at the club costs about 16 times the annual salary of a typical Beijing resident.

The 18-hole course, with its pink-shirted female caddies, had its "soft opening" in 2009, five years after the Chinese government declared a moratorium on golf course construction.

The ban, imposed amid concern over the country's dwindling arable land, clearly hasn't stopped the boom in golf course construction in China. Over the last five years, the number of courses has soared from 170 to an estimated 600. Hundreds more are under construction despite signs of market saturation.

The appetite for new golf links has grown in concert with the surge in China's property market. A set of greens can boost the value of residential developments, allowing local governments to pocket more in land sales. With so much money at stake, municipal officials have had little incentive to enforce the ban.

The central government has periodically ordered courses to be demolished, but the crackdowns are never sustained. Meanwhile, developers are able to capitalize on legal loopholes to continue laying courses.

"It seems that if the government was really serious about trying to curtail the growth of golf courses, they would have developed a series of hoops that developers would have to jump through," said Dan Washburn, the author of an upcoming book about golf in China. "By issuing a moratorium and turning their head, they let things grow out of control."

For decades, the communist government considered golf one of the many trappings of the bourgeoisie, and banned it until 1984. But the country's economic reform has given rise to the game, especially among the country's nouveaux riches who are drawn to its novelty and prestige.

On a driving range in Beijing, a 42-year-old investor who would give only his last name, Shi, said he spends about $150,000 on golf each year.

"It's a good way to do business," he said. "You can spend five hours playing a game, far longer than a dinner. And the air is better than in a karaoke parlor. I like to think of a golf course as a big garden."

China's leaders have become increasingly sensitive to shows of elitism at a time when the gap between rich and poor continues to widen. Some observers think the ban on course construction is merely shrewd PR.

That has frustrated environmental advocates who have long argued for stricter laws preventing land from being confiscated for golf or residential development.

"China is highly populated on most of the good land," said Ma Jun, head of the Institute of Public and Environmental Affairs in Beijing. "It's way too easy to take land from disadvantaged farmers, or take land that is designated for ecological use."

Ma said the expansion of golf could have a disastrous effect on the environment. Course construction in China's less-populated western provinces is destroying pristine wetlands and forests. Heavy use of pesticides also creates a severe risk of groundwater pollution. An average course uses about 30 times the per capita water availability in chronically water-short Beijing.

To skirt the moratorium, developers list the project as a hotel, or a residential complex, or a park. "They just don't use the word 'golf' in their planning stages," Washburn said.

Patrick Quernemoen, the Citee club's general manager, said the developer was given amnesty because the course was not built on arable land. (His assertion could not be independently verified. The Ministry of Land and Resources did not reply to repeated requests for an interview.)

The Citee club is also one of hundreds of courses in China that are struggling to turn a profit. To maintain its exclusivity, the club has announced a cap at 300 members. So far, only 70 people have signed up.

But in many cases, golf courses aren't expected to be profitable, but rather to fuel interest in the luxury property around them, said Dana Fry, a golf course architect based in Hong Kong.

This makes the abundance of fairways vulnerable to a bursting of China's property bubble.

No place captures the uncertainty of the golf boom better than Hainan, the tropical island province in southeastern China. In a push to make the island an international tourism destination by 2020, the government has exempted it from the moratorium, and developers have reacted with zeal.

The island is home to almost 30 courses. One complex, Mission Hills Hainan, is larger than Manhattan. A celebrity tournament there in October brought in Matthew McConaughey and Hugh Grant. After a round, Catherine Zeta-Jones called it a "tough course."

But on Hainan, the threat of a bubble is palpable. In two of Hainan's cities, Sanya and Haikou, average property prices were up 50% in early 2010 from the year before, according to the National Bureau of Statistics.

"You have investors going and buying 10, 15, 20 homes," Fry said. "It's creating an artificial price structure that, at some point, has to blow up."

Kaiman is a special correspondent.

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