Published March 7, 2009

Prices of golf club membership holding steady - for now

By VEN SREENIVASAN

	Email this article
	Print article
	Feedback

STOCK prices have tumbled to their lowest levels since 2003. On the property front, asset writedowns and landbank provisions have begun. The job market is facing its worst crisis in years. And the global financial market and system remain in meltdown mode.

Yet, golf club membership prices here have stayed steady, if not moved up slightly.

The BT Golf Index last month hovered at 143.78 points, barely a quarter of a point down from January's 144.03 points.

In fact some quoted open market club membership prices actually rose during the month. Singapore Island Country Club was going at $150,000, up 5.6 per cent from January's $142,000. Sentosa Country Club membership had an asking price of $160,000, compared to $155,000 a month earlier. Even second-tier Seletar was up $1,000 at $42,000.

So what gives?

A check with club membership brokers drew a blank. Some noted that the first round of selling was done and the market had 'dried up' somewhat, with very few transactions taking place.

Whatever the reason, there seems to be a disconnect between the valuation of this asset class and the prevailing economic realities.

It is generally recognised that movement in asset prices is symptomatic of the prevailing economic condition. But it would be quite a stretch to conclude that the new-found resilience in club membership prices is indicative of a potential bottoming out in the underlying economic fundamentals and financial markets.

Rather, as some membership brokers suggest, what we could now be seeing is the eye of the hurricane. That eerily quiet and calm moment before the second wave hits.

The first wave came when the people got their pink slips between October and December last year. Many were from the financial sector, and a significant number were expatriates who were forced to return home.

Then things got somewhat quiet in January and into February, leading into the Chinese New Year festive period. But looking ahead, the indications are that the economic and financial circumstances can only get worse before getting better. The Singapore economy is expected to shrink some 8 per cent this year.

Last week, DBS forecast almost 100,000 job losses this year, with 10,000 layoffs in this quarter alone. While the earlier job losses were largely from the financial sector, this is likely to spread to the services and manufacturing sectors in the months ahead.

Meanwhile, the stock market continues plumbing new multi-year lows. Property prices, which have been relatively resilient so far, could soon collapse, according to many analysts.

In short, the 'other shoe' could drop anytime in the coming months. That being the case, one should not expect this surreal resilience in the golf clubs memberships market to hold for long. After all, it is the least critical of the five Cs.