Vacation resorts in unlikely places
After more than a decade of vacationing in Aspen, Colo., Tom Oreck wanted to escape the crowds. But when real estate agents showed him ranches in Wyoming, Oreck balked. He said they were a little too remote, and he worried his two young children would be bored.
Now when he wants to get away from it all, the 52-year-old president of vacuum-cleaner maker Oreck Corp. flies his private plane to a remote corner of North Carolina's Appalachian Mountains -- and drops into a vacation-home community with restaurants, tennis and a spa. Between an on-staff naturalist who conducts "salamander safaris" and an activities director who teaches whittling, the kids stay entertained. "This gives a good balance," Oreck said.
From the West Virginia woods to the peaks of Montana, developers are borrowing the gated-community approach from established resort towns such as Palm Beach, Fla., and transplanting it to some unlikely locations.
In the marshland near Riceboro, Ga., a development called Hampton Island sells lots for $1.5 million and up, promising residents an equestrian center, use of a seaplane and a working sorghum mill powered by donkeys.
At the Hideaway in La Quinta, Calif., where homes range from $1.5 million to $6 million, cabanas on the golf course serve members hot hors d'oeuvres after the 9th hole.
Montana's Yellowstone Club, where owners include former Vice President Dan Quayle and cyclist Greg LeMond, has its own private mountain and ski lifts.
Developers and home buyers said the vacation migration is partly driven by the growing crowds at traditional spots. Nantucket, Mass., saw the number of homes grow 31 percent between 1990 and 2000, while the population of Hilton Head, S.C., rose 43 percent over the same period.
With vacation-home prices nationwide continuing to rise faster than the overall market, some buyers said it's worth going to a lesser-known locale to try to get more for their real estate dollar.
Without established cachet, the investment potential is uncertain, and many of these developments haven't been around long enough to form a resale track record. The Stock Farm Club, a community founded in Hamilton, Mont., by brokerage-firm Chief Executive Charles Schwab, has 19 of its 94 lots unsold after five years. No turnovers have been recorded; one house listed in April at a sale price of $3.15 million hasn't found a buyer.
Selling can be complicated, too, because many of these communities are structured as private clubs and require board approval for prospective purchasers.
Getting along with the neighbors is no small matter. These developments often push membership as a selling point, said they offer a sense of community that can't be found at an ordinary rural vacation home. In addition to the usual golf and tennis, there's typically a central clubhouse with full-time staffers coordinating activities, which can range from bridge tournaments to ice-cream socials and teen dances.
The Yellowstone Club stages an annual festival called Camp YC. It includes wine tastings and themed dinners.
Security and privacy are a major marketing point for these clubs. Developers said the relative obscurity of these places adds a level of insulation. Like any gated community, most have some version of an actual gate and guardhouse, but security provisions often go further. At Cherokee Plantation, in Yemassee, S.C., where custom-built homes start at $4 million, bypassing the 24-hour guards means crossing the Combahee River on one side or navigating a maze of bogs and fields on the other. Manager Mark Scott said staffers know almost everyone by sight. "Try to drive up," he said. "You won't get far."
Real estate agents said the approach doesn't appeal to some prospective buyers. Because of the private-club structure, building a house can require board approval on architectural details.
Some might prefer to build their own tennis courts rather than share facilities. And not everyone is keen on the idea of community mixers, said Laura Green, a Lake Toxaway, N.C., broker. Wealthy buyers "don't need it -- they can have their own weenie roasts," she said.
Establishing a big development in a relatively rural area can also have ramifications for nearby residents and towns. To launch the Hampton Island project, developer Wade Shealy decided to gamble on a gated community in eastern Georgia even without a well-known resort town nearby. Shealy discovered the property while he was scouting land for Intrawest, a resort-development firm where he was a vice president of sales and marketing. Intrawest passed, but Shealy, who had worked for years as a real estate salesman for gated communities on Hilton Head Island, S.C., decided to quit and pursue the idea.
Gathering a group of investors, including local residents and brokers in resort realty, Shealy set out to buy 2,300 acres owned by retired Atlanta private money manager John Morgan, who had built a Greek-Revival plantation home and a handful of other small buildings in the middle of marshland that's home to alligators, minks and wild hogs. Cutting a deal with the state of Georgia that 90 percent of the land would remain undeveloped in exchange for tax breaks, Shealy and his investors paid $19 million for the land and compound, plus an additional 1,600 acres.
Early on, the group scored a success by attracting a high-profile member, actor Ben Affleck, who knew a friend of Shealy. Affleck paid $7.1 million for Morgan's compound and surrounding 83 acres, and shortly afterward vacationed at the property with his then- girlfriend, actress Jennifer Lopez. A spokesman for Affleck declined to comment.
Now, 15 months after starting, Hampton Island has sold 22 lots at prices of $1.5 million or more, including the one-time club membership fee, which is currently priced at $250,000. Shealy estimates that, if he succeeds in plans to sell a total of 110 homes to members, the property he and investors paid $19 million for could eventually be valued at more than $100 million. Right now, though, there's little on the site other than Affleck's compound and a series of construction projects expected to stretch into 2007.
Buyers at these private communities, especially those who get in early, are betting that the value of their investment will rise and, in some cases, that the value of the club membership will go up, too. Many of these clubs are structured as so-called equity memberships. Residents own their memberships and if the club decides to raise the fee, can sell them at a profit.
But selling can be more complicated than an ordinary real estate transaction. A prospective buyer has to be approved by a membership committee. At the Stock Farm, until the clubs' 350 memberships are sold out, people who want to sell their membership must wait until 10 new members have joined. The member gets back the initial investment and splits the profit with the club. If the membership price hasn't risen, there is a $5,000 "transfer fee" to exit the club.
When a development catches on, investments can appreciate quickly. At the Hideaway, where the 423 available properties sold in 18 months, profitable resales followed the completion of a second golf course at the community. A lot that sold for $475,000 in June 2003 resold last month for $750,000, while a lot purchased for $620,000 in January 2003 resold in May for $875,000.
Wall Street Journal
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