south korea Japan Redux?

Is the golf business in South Korea about to take on the trajectory of the golf business in Japan?

South Korea’s decade-long golf construction spree, fueled by a buoyant economy and surging middle-class aspirations, is losing momentum, and the Korea Times worries that “a slew of bankruptcies” may be “imminent.”

South Korea has 435 existing golf properties, according to the Korea Golf Course Business Association, plus 180 more either in planning or under construction. But play at the nation’s 228 private courses has been “dismal” of late, says the Times. The number of rounds played reportedly peaked at 18.2 million in 2009, dropped to 17.7 million in 2010, and may not hit 16 million this year.

As a result, a growing number of clubs have been pushed to the edge of insolvency.

“At least 20 golf courses appear to be on sale right now, and one could expect a dramatically larger number of owners bailing next year, as profitability continues to deteriorate,” a KGBA official told the Times. “The rapid growth number of golf courses over the years and the sharply declining membership sales continue to raise worries that the country might be headed for a similar path experienced by Japan, which saw a large number of courses topple after the golf boom fizzled.”

South Korea still has an estimated 2 million passionate golfers, but if Japan’s experience is any guide, the number will shrink as its population ages and stops playing golf.

Some of the information in this post originally appeared in the December 2011 issue of the World Edition of the Golf Course Report.