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Published on Jul 6, 2012 on Straits Times


Laguna may stay put till 2040
Country club is considering govt deal requiring it to build hotel on premises


If it agrees to the Government's lease extension deal, Laguna National Golf and Country Club estimates that it must raise $152.4 million to finance the extension fee and cover the cost of building a hotel. -- ST PHOTO: SEAH KWANG PENG

If it agrees to the Government's lease extension deal, Laguna National Golf and Country Club estimates that it must raise $152.4 million to finance the extension fee and cover the cost of building a hotel. -- ST PHOTO: SEAH KWANG PENG By Tessa Wong
LAGUNA National Golf and Country Club will remain at its current location in Changi till 2040, if it agrees to a government deal to build a hotel on its premises.


The Singapore Land Authority has confirmed that it has offered an extension after it was approached by club management.


The current 30-year lease expires in 2021. If the club agrees to the proposal, this lease would be replaced by a new one allowing it to stay till 2040. The club has until Aug 7 to agree to the deal.


Background story
FINANCING THE AGREEMENT


•Laguna would have to pay the Government a premium and build a hotel on its premises. The total estimated cost is $152.4 million.


•Laguna's owner, Mr Peter Kwee, will fork out more than half of this amount, while another third will be raised from new members' subscription fees.


•The remaining 15 per cent would be raised from existing members, which number around 3,000.

Laguna was built by NatSteel, which won a government land tender in 1990 with a bid of $131 million. The club, which has about 3,000 members, is now owned by property and car tycoon Peter Kwee, who took over in 2001.


The Government's offer comes at a time when it is reviewing land-use plans in Singapore, including golf course sites.


The Straits Times understands that under the new agreement, Laguna will have to pay the Government more than $50 million.


It will also have to build a hotel on its premises, said the management in a circular sent to Laguna members late last month. It is now in talks with three international hotel operators.


Mr Ku Swee Yong of International Property Advisor noted that the lease extension proposal is a sign that the Government is likely to preserve golf courses in Changi. Tanah Merah Country Club and National Service Resort and Country Club are also nearby.


'Because of aviation requirements, the land surrounding airports needs to be low-rise and have a low population density,' Mr Ku said.


Property consultant Ong Kah Seng, director of R'ST Research, said the pricing is 'attractive' and the offer reflects the Government's willingness to cater to lifestyle requirements.


Golf club membership broker Fion Phua of Tee-Up Marketing Enterprises said the offer is a 'good and cheap deal' for Laguna as profit margins are potentially high with a hotel near the airport.


To cover the cost of building the hotel and paying the fee to extend the lease, the club estimates that it must raise $152.4 million. Mr Kwee will fork out more than half of this amount, while another third will come from new members' subscription fees.


The remaining 15 per cent will be raised from existing members. Laguna hopes to get about 200 of them to extend their memberships. The cost will range from $30,000 to $119,000, depending on if it is for a local, foreign, individual or corporate membership.


A local individual member will have to pay $80,000.


Members have until July 27 to respond. So far, close to 100 have agreed to an extension, said Laguna managing director and chief executive Patrick Bowers.


The new entry fee will be $150,000 for a local member.


Concerns have been raised over whether the need to depend significantly on new members' subscriptions to raise capital will lead to an expanded membership and diluted exclusivity.


Mr Bowers said the numbers are likely to fall over time as only a limited number of existing members are extending. When determining how many new memberships to offer, 'we will factor in the current membership size and the desired size, and then reprice them accordingly. Each phase of new membership will rise in price', he added.


Mr Philip Lim, 60, is among those refusing to pay for a membership extension. He said: 'I feel the price is not pegged to the market rate. Many of us are golfing members and the new hotel will be of no benefit to us.'


About 1,800 of Laguna's members are golfing members.