Investors are starting to lose their appetite for purchases of South Korean golf clubs, as soaring valuations raise concerns of a price bubble and potential buyers become more wary of the tough operating environment for resorts.

In the latest setback for the industry, Golfzon County – the country’s largest golf course operator – and other potential buyers have withdrawn from the bidding process for Hoban Construction’s 36-hole Sky Valley Country Club because of the high price tag, industry sources said on Monday (October 26).

“They submitted non-binding offers last month but eventually pulled out after concluding the seller’s price expectations are too high,” an industry insider said.

The valuations of golf clubs have continued to climb this year. In August Doosan Group’s Club Mow Country Club was sold for 185 billion won ($164 million), or about 6.8 billion won per hole, and a new record was set in the following month when Keistone Partners signed a deal to sell its 18-hole golf course Anseong Q for 140 billion won, or 7.8 billion won per hole.

However, some potential investors apparently think previous deals were overpriced and that Sky Valley’s expectations need to be adjusted to reflect its less attractive fee structure compared to rivals that give public access, industry watchers said.

Interest in Hanwha Hotels & Resorts’ Golden Bay Golf & Resort has also dwindled. Three of the four shortlisted bidders for the 27-hole golf course withdrew from the deal, leaving only Golfzon County. Hanwha reportedly wants a valuation of 10 billion won per hole, but Golfzon County is not expected to agree on that price because of the course’s location in South Chungcheong Province, which is far from Seoul, as well as the gloomy prospects for the resort industry.

“The valuation of golf clubs jumped for the past year and concerns are rising about possible bubbles in the price,” said another industry insider. (Reporting by Byung-yoon Kim)