Ben,
Yes, 2004 was indeed promising. All seems so far away now...
I think the problems at St Andrews Beach are basically due to the business model of the development, although the other issues you mention play possibly a small role too.
GCPL managed to sell around 200 shares by the time I joined in July 2004, but these were held by only 110 or so actual members.
The first time I saw the property I was stunned -I couldn't get back to my bank in Melbourne quick enough to write a cheque, knowing that the land was in the hands of Doak and Clayton.
I think most of these 110 members, like me, allowed their heart to rule their head, for when looked at closely, there are serious credibility issues with the project overall, and everyone else in Melbourne - especially those already members of clubs and much more 'in the know' in regards to the costs involved - looked at it with their brain, and didn't like what they saw.
Namely:
- The actual prospectus itself is very ambiguous in many instances, and casts doubt upon the project, if not the credibility of those behind it, immediately. For instance, it states at the beginning of mine that the construction of two courses and the clubhouse is not dependent upon sales of shares. Yet later in the document, it states that only the Gunnamatta and clubhouse are guaranteed to be built regardless of share sales.
- The fact that the clubhouse was not dependent upon share sales, but has yet to materialize.
- The $50,000 no fees share relied upon what many people saw as an optimistic number of rounds (25,000) on an as yet unbuilt second course, with an unbuilt hotel thrown into the mix too.
-GCPL only guaranteed to pay for maintainance until January 1st 2010, which means that the second course and hotel had to be underway by mid 2006 in order to be constructed in enough time to build up business. Once this didn't happen, even more doubt crept in about the viability as a whole of the development, thus creating a vicious circle where no one would buy shares, which meant that things weren't being built etc,etc.
-The figures GCPL used as to what it would cost to maintain and administer both courses - $1.5-1.6 million a year - appears to be wildly optimistic.
-The property for sale in the development, crucial to financing much of the infrastructure, is leasehold only. Whilst this may be a reasonably common method of obtaining property in London, it isn't here, and there is also the knowledge that the Duke of Westminster and his progeny will exist in the future, unlike an unlisted private company.
- The constant changes in the offerings to potential shareholders lent an unneeded air of desperation and panic to the project.
Some people speculate that because you are buying a share that is also a leasehold only, as opposed to an actual share in the property, as with The National, this is a significant reason for the lack of success at St AB, but I am not convinced by this argument.
The Heritage on the far outer Eastern suburbs of Melbourne, with a very similar structure to StAB - two courses, hotel, some property - has leasehold shares, and they have sold over a 1000. And for something around $35,000 I think, with annual subs to boot. Similarly, Sandhurst, on the fringes of the Peninsula.
There is possibily something to the saturation of golf, tied in with the distance. The Mornington Peninsula has seen a number of developments in recent years, several with public access, and in an increasingly time poor world, it may be true that the size of the market willing to spend so much for something over an hour away, isn't what the directors thought.
However, it must be rememebered that for all of the polish and security of The National, it too struggled in its very early days, and I am pretty sure it more than once came close to going under.
PS. The directors would no doubt say all of the above is bollocks.
