Hoban Group will sell Sky Valley Country Club to Engineering Guarantee Insurance (EGI) for 257.6 billion won ($233 million), or about 7.2 billion won per hole, which is a lower price than it had been targeting, the company announced on Tuesday (December 15).

The 36-hole club, consisting of a private course and a public course – each of 18 holes – had been expected to benefit from its proximity to the Seoul metropolitan area and the fact that it includes a public course. As with other real estate, golf courses are valued according to cashflow, which has been boosted as the Covid-19 pandemic brings in more players.

Keistone Partners secured 7.8 billion won per hole when it signed a deal to sell its 18-hole public golf course Anseong Q to a consortium led by IGen Investments for 140 billion won. Doosan Group’s 27-hole public golf course Club Mow Country Club was sold for 185 billion won, or about 6.8 billion won per hole.

Sky Valley CC’s price of around 7 billion won per hole compares favorably with recent deals, but is below the construction firm’s expectation of 300 billion won, or 8.4 billion per hole.

EGI has discounted the value because the club includes an 18-hole private course. Unlike public golf courses, private courses have to pay individual consumption tax, while property tax rates are sharply higher. Private courses also have a weak cash-generating capability compared to their size.

“A number of strategic and financial investors were attracted to Sky Valley CC at the beginning, but many of them decided to walk away from the deal due to Hoban Group’s high target price,” said an industry source. “The negotiations between EGI and Hoban Group didn’t go smoothly either.”

Golf clubs up for sale include 27-hole public course Golden Bay CC, 18-hole public course Tiger CC and 18-hole public course Oxfield CC. (Reporting by Byung-yoon Kim)