Mission Hills to Spend $3.7 Billion on Golfing Complex in China's Hainan

Mission Hills Group, owner of the world’s largest golf club, will boost investment sixfold in a golfing complex on China’s Hainan island as the nation’s economic rebound spurs a tourism and property boom.

Mission Hills, based in Shenzhen, the southern city adjacent to Hong Kong, is to spend a further 25 billion yuan ($3.7 billion) by adding more golfing, retail and community facilities at its 5 billion-yuan club in Haikou, in the island’s north, Vice Chairman Ken Chu said in an interview in Hong Kong.

“We have confidence in the rise in Chinese consumption and them having a holiday mentality,” Chu said yesterday. “We see the growth of the game and we see the growth of this business sector.”

Economic growth increased the number of millionaires in China to 875,000 in 2009, according to Hurun Research Institute, helping boost tourism and property development on tropical, beach-fringed Hainan. Mission Hills is switching its focus from foreigners to Chinese golfers as the nation’s newly wealthy seek aspirational leisure pursuits, Chu said.

China’s approval of Hainan, a southern province, as an international tourism hub in January sent property prices soaring. They rose 50.5 percent in the provincial capital Haikou in February, and 49.3 percent in the southern resort city of Sanya, according to government data. In April, prices jumped 53.3 percent in Haikou and 52.3 percent in Sanya.

The designation allows for the construction of resorts, expansion of facilities to cater to exhibitions and conventions, and eventually the opening of duty-free shopping.

‘More Gains’

“There might be more gains, especially as the people who buy homes are the rich mainland ones who want to invest in or buy properties for their holidays,” Wang Ren, a Hong Kong-based property analyst at CCB International Holding Ltd., said in a phone interview. “As there are more and more rich Chinese, golf will become more popular.”

Mission Hills opened a 12-course club, the world’s largest, in 1992 in the southern province of Guangdong, catering mostly to foreign golfers, who made up 80 percent of its customers. It is now targeting Chinese players who have grown rich in an economic boom that sent annual urban wages 64 percent higher to 17,175 yuan in the five years to 2009.

The Hainan club, built on top of a volcano, opened in March offering an initial six courses, according to company data. The group is operating it as a public, rather than a members-only, facility to attract more golfers, Chu said.

30 Courses

When fully completed, the Hainan club will feature 10 courses, according to the company, and will be similar in size to the Shenzhen complex, which spreads across 20 square kilometers (5,000 acres), or equivalent to the combined size of six Central Parks in New York City. The Hainan government, meanwhile, suggests on its website that the development may eventually have 30 courses.

Southern China, particularly the Pearl River Delta region and Hainan, will remain Mission Hills’ core investment area in China, Chu said. The group has about 6,000 corporate and individual members at its Shenzhen club, which has 10,000 employees, he said. The Hainan club currently has 2,000 staff.

Since golf was added to the Olympics program in October, the number of people playing the game has risen to 5 million from 3 million, according to China Golf Association. China topped the gold-medal standings at the Beijing Olympics in 2008.

“The country will be spending money to promote the game, to build the younger generation to participate in the sport,” Chu said. “There’s a chance for them to win a gold medal and golf is a game in which the Chinese can excel.”

To contact the reporter on this story: Wing-Gar Cheng in Hong Kong at wgcheng@bloomberg.net.

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