Catching the (Manmade) Wave
Technological advancements are democratizing the sport of surfing and creating a new leisure-anchored asset class: surf parks
👉I’m speaking at the Surf Park Summit in Virginia Beach this November 5-7! Get your tickets here and use the code ‘thesis15’ for 15% off.
When I was asked to speak at the Surf Park Summit in Virginia Beach later this year, I thought there must have been a mistake. I’m from rural Arkansas. I’ve never surfed, and I knew next to nothing about surf parks. Clearly the Surf Park Summit team had the wrong Brad Hargreaves.
But as it turns out, the emerging surf park sector is far more interesting than it may initially appear. It fits squarely within the broader trend of leisure-anchored real estate, such as ski resorts, golf courses, and race tracks. And, perhaps most surprisingly, there’s a big technology angle to why surf parks are taking off right now. Starting around 2020, machine-made waves became good and reliable enough to make surf park-anchored real estate viable. Now, the race is on to bring surfing to the masses.
While we wrote about the major surf park players in Thesis Driven’s investor-only Buy Box series in April, the sector’s rapid emergence is worth bringing to all Thesis Driven readers. This is not another trendy sport-of-the-month, pickleball-on-the-water phenomenon.
Today’s letter will explore the surf park industry, including:
The arc of surfing and recent technological advances;
The leisure-oriented real estate trend and model;
Interviews with surf park developers;
Thoughts on the evolution of new asset classes and where we go from here.
On Surfing
Surfing is among the oldest sports still regularly practiced today. “People throughout Polynesia and Melanesia were surfing thousands of years ago,” explained Jess Ponting, Director at the Center for Surf Research at San Diego State University and cofounder of the Surf Park Summit, a conference for developers and operators focused on this emerging sector. “Before the Incas in Peru, the Chan-Chans were surfing on canoes. And the diaries of missionaries in Fiji described women surfing.”
Ancient origins aside, surfing has become a hot sport in recent decades with surf travel growing 46% from pre-pandemic to 2022. An estimated $68.3 billion was spent on surf travel in 2024 and is projected to continue rising as part of a broader growth trend in skill-based leisure.
But anyone who is familiar with the sport knows, surfing can have a brutal learning curve for newcomers.
Beyond the physical challenge of paddling, balancing, and catching waves, new surfers must quickly learn the unspoken rules of lineup etiquette—like right of way, not dropping in, and how to position themselves without interfering with others. Crowded lineups add pressure, with experienced locals often dominating the best waves, making it harder for beginners to get practice time or feel welcome. Make the wrong move, and you risk being branded a “kook”—a derogatory term for an inexperienced and potentially dangerous surfer—and getting chased from the water by the locals.
As a sport, surfing had a big problem: the limited number of accessible surf breaks put a natural cap on participation.
This combination of pent-up demand and limited natural supply has prompted many to ask: can we build manmade surf destinations?
Oceanus ex Machina
The idea of creating new, manmade surf experiences is not a new one.
Starting in the 1960s, early wave pools began experimenting with mechanically generated swells. The first documented artificial wave was created at Big Surf in Tempe, Arizona, which opened in 1969 and featured a pneumatic wave generator that produced small, rideable waves. Though primitive, it proved the concept that surfing could be removed from the ocean and brought inland. Other early facilities, such as the Typhoon Lagoon at Disney World (1989), followed suit, but waves remained inconsistent and often lacked the power and shape needed for serious surfing.
The nascent surf park industry suffered another setback in 2008 with the failure of Orlando’s Ron Jon surf park. “Tens of millions of dollars were lost,” said Ponting. “It squashed any surf park development for seven years.”
Yet technological advances shook the surf world in 2015, prompting renewed interest in the surf park idea. “Kelly Slater Wave Co’s video broke the surfing internet,” explained Ponting. “Previously people would talk about surf parks like a mediocre day at a surf break. Then the Slater video came out, and now it was the best day you’ve ever seen at the surf break.” Unlike previous technology, Slater’s hydrofoil system was able to create performance-quality waves appealing to serious surfers.
But 2015-era technology still lacked the capacity to bring surf parks to the mainstream. While it produced great waves, the Slater system could only generate one wave every few minutes, limiting its capacity to four or so surfers per hour. Early models of WaveGarden, the other notable technology of the time, wasn’t much better with only two waves every 90 seconds.
The surf park industry would not be bottlenecked for long, however. The next version of WaveGarden’s technology—Cove—transformed the industry. “Objectively, WaveGarden Cove changed the game with throughput,” said Ponting. Suddenly, surf parks could produce over 1,000 waves per hour and accommodate 80-90 surfers at any given time. The same park could also feature a variety of waves simultaneously, broadening their appeal to surfers with various styles and experience levels.
“A longboarder and a short board surfer are looking for different things in a wave even if they’re both best-in-class athletes in their own branch,” said John Luff of Beach Street Development. “We want tech that can make a world class wave for both.” Luff, a surf park developer we’ll return to later on, embraced Wavegarden’s Cove technology.
But Cove’s most critical feature had nothing to do with either the quality or quantity of its waves, but their reliability. While previous systems relied on a single engine—for instance, a hydrofoil—to produce waves, Cove’s waves are powered by 52 separate electromagnetic engines. “A few [engines] can be down and you’re still surfing,” said Andy Hadden, founder of Lost Shore Surf Resort, a surf park in Edinburgh, Scotland.
As anyone in hospitality or property management can tell you, this makes all the difference. While maintenance issues would’ve previously shut the entire surf park down—bringing the surf-anchored destination down with it—the Cove made surf parks are far more resilient. “If a surf park is anchoring a 150 key hotel and 50 residences and you lose your demand generator, that hurts everything,” said Luff. “But the Wavegarden Cove eliminates single points of failure and is far more reliable.”
Suddenly, surf parks could produce waves of the quantity, quality, and reliability to make surf park-anchored real estate viable. But it’s unlikely the technological advances stop here; other companies like Endless Surf, SurfLoch, Swell MFG, and PerfectSwell have each developed their own wave generating machines that are powering surf park locations around the world.
Today, there are dozens if not hundreds of proposed surf park developments underway in the US, such as projects in Florida, the San Francisco Bay area, Utah, and Greater Boston, with many more internationally in Europe, the Middle East, South America, and Australia.
With wave technology cracked, the race to turn surf parks into a new sector of leisure real estate is on.
The Leisure-Anchored Boom
Leisure-anchored real estate is a fairly simple concept: the leisure attraction—be it a ski mountain, golf course, or something else—brings people to a place where they spend money on everything around the attraction. While the anchor may or may not make money itself, it boosts the value of everything nearby. “Everything” in this case can range from hotels to retail to food and beverage to branded residences and much more.
Beach Street’s John Luff is one sponsor embracing the leisure-anchored path. DSRT Surf in Palm Desert, California, one of Beach Street’s three surf parks under development, comes with the “trifecta” of uses: residential, hospitality, and a surf lagoon anchored beach club.
For Luff, success in the surf park business is just as much about keeping the whole family happy as it is about the surf experience. “Surfers come and bring the family along with them,” says Luff. “But it’s super rare that the whole family are frothing surfers. Maybe dad is, maybe one kid. So you have to have other things [at the park] that keep the whole family stoked—a beach club, retail, health and wellness programming, stuff for little kids to do like the kids’ camp at Jackson Hole and other skill-based amenities.”
Luff’s reference to ski resorts is apt, as they’re probably the best comparable to where the surf park sector is headed.
“A ski mountain can present all sorts of real estate opportunities,” noted Bryan Dunn of Cardinal Lands. “The ski asset is a powerful wedge for bringing folks into a regional ecosystem.” Cardinal Lands is developing residential communities in emerging ski destinations; they completed a project in Big Sky, Montana in 2023 and are currently developing two residential communities in Driggs, Idaho near the Grand Targhee ski resort and a short drive from Jackson Hole.
There are wide variations across the leisure-anchored model. In some cases, the development is anchored by a large hotel, which often shares amenities with branded for-sale residences. Residential owners also may have the option of offering their units up for nightly stays managed by the hotel operator (and under the hotel flag) when they’re not present.
Other leisure-anchored residential developers—including Cardinal—instead choose a “headless” model without the hotel anchor. “Many hotel-anchored new development projects will never cash flow a penny on the hotel side but will be highly profitable on the for-sale branded residential side,” said Dunn. “At Cardinal Lands, we don’t want to force high dues to pay for loss leaders like many golf course communities do—especially in destinations where golf is not the core demand driver.”
It’s worth distinguishing between leisure-anchored communities with an anchor that makes money and those where the anchor is a loss leader. Ski mountains, for instance, can be quite profitable, while other leisure anchors—golf courses and race tracks, to name two—typically lose money. “Golf courses often don’t make money,” said Dunn. “But the residential developments surrounding those courses do.” By investing in higher-throughput technology, surf park developers believe they’re building around a cash flow-positive anchor rather than a financial weight on the surrounding real estate.
“[The surf] should not be a burden for you,” explained Hadden. “It’s a moneymaker when structured correctly and should have a similar return to other property classes.”
The best example of surf park-anchored real estate today probably comes from Brazil, where KSM Realty’s Praia de Grama development generated significant land value uplift and mid-teens IRRs. From our recent Buy Box letter:
Opened in 2021, Praia da Grama became Brazil’s first surf park and a flagship for the private club model. Built by KSM Realty within the upscale Fazenda da Grama resort near São Paulo, land values near the Wavegarden Cove lagoon jumped from ~$60/m² to $500/m², driven by demand for the inland beach lifestyle. The project’s success led to a larger follow-up, Beyond the Club, and drew backing from BTG Pactual and surf icon Gabriel Medina.
Aventuur is another developer making a bet on surf-anchored real estate. Notably, Aventuur secured exclusive access to WaveGarden Cove technology in nine US cities including Austin, Dallas, Phoenix, and Las Vegas. Backed by a mix of strategic family offices, impact funds, and celebrities, Aventuur has projects underway in Jacksonville, Florida, Perth (groundbreaking 2025), and Auckland (infrastructure active).
To be clear, not every surf park developer is targeting a private club, mixed-use model. URBNSURF in Melbourne and Sydney, Australia and The Wave in Bristol, UK are two examples of public-access surf parks monetizing by selling surf time by the hour as well as F&B and merchandise. The Wave, for instance, has produced double-digit yields despite Bristol being a less-than-ideal surf climate.
While many attractions could hypothetically fit into the “leisure-anchored” category, both Luff and Ponting emphasize the distinction between skill-based activities (like skiing, golf, and surfing) and purely thrill-based activities such as water parks.
“Skill-based activities hold a huge premium over thrill-based,” says Luff. “Skill-based experiences are really about getting people into flow states in a way that thrill-based things like water parks cannot. Those neurochemical releases—serotonin, dopamine—it’s very predictable how to get those releases. And we’re all chasing feeling the best we absolutely can.”
Institutional Interest
While most surf park developments to date have been backed by high-net worth individuals and family offices, the sector is beginning to draw institutional interest.
Hadden’s Lost Shore development outside Edinburgh, Scotland is among the first institutionally-backed surf park projects, drawing support from the Scottish National Investment Bank and the pension fund of BAE Systems. But Lost Shore isn’t the only project drawing institutional interest. Sculptor has partnered with Discovery Land on Austin Surf Club, Sullivan Street with The Wave Bristol, and BTG Pactual with KSM on Beyond the Club.
Hadden believes Lost Shore’s low-risk, mixed-use approach unlocked institutional capital. “I did what was initially deemed to be a high-risk venture in the most risk-averse way possible,” he explained. By owning the underlying land and combining three different uses—a surf club, hospitality, and food and beverage—Hadden was able to lower the overall risk profile of the project.
Given his relatively low-cost, long-term institutional backers—his loans are on a 150 year term, a concept likely alien to our American readers—Hadden chose to retain ownership of his 53 units rather than offer them as for-sale properties. “Retaining ownership provided a higher IRR for shareholders over the longer term.” Like Luff, Hadden went with WaveGarden Cove technology. “You get a multitude of green runs, blue runs, and black runs—and a couple of diamond blacks. You don’t want to get fooled by technology that can only run greens or diamond blacks.”
Since opening in November 2024, Lost Shore has become a destination for surf tourists from across the US and Europe. “Visitors want to come and explore Edinburgh as well, so they use us as a base to surf, golf, and see the Highlands.”
But while there are the beginnings of institutional interest in the sector, the surf park industry is relatively immature in comparison to the ski or golf sectors—after all, viable surf park technology is only about five years old. But for developers starting today, that offers an opportunity to ride cap rate compression as the sector proves out.
“The institutional investor is typically more interested in the proof of scale moment,” said Mo Saraiya, Managing Director at Madison International. “Once the model has been baked and there is a little bit more history around the cashflow generation of the asset, that's when the institutional investors will start jumping in. Something that has an unlevered return on cost of 12% to 15% and strong operating margins, I think is going to get there.”
Surf park developers don’t necessarily disagree with Saraiya’s view. “Until there’s three years of data on at least ten facilities all showing healthy EBITDA, the biggest money in the world doesn’t have the mandate to take the type of risk that would be required at this point,” explains Hadden. “The question is whether we are six months away or six years away.”
On Democratization
Industry insiders anticipate the development of 200 to 300 new surf parks around the world by 2040. With high-throughput technology now commonplace—and only going to improve—surfing will soon be vastly more accessible to many millions of people. Unlike skiing, which requires a mountain, surf parks can go pretty much anywhere. While the surf parks we’ve discussed here aim to offer an elevated experience, it’s likely the sector will see a diversity of models and price points as it matures. (Surf Park Central, the organizers of the summit I’m keynoting in November, puts out a lot of research on this evolution.)
“I don’t see a prescriptive set of things that accompany a surf park destination,” said Luff. “It’s going to be like the chain scale of hotels. You’ll have Super 8s focused on affordability, and then you’ll have the Ritz or Four Seasons.”
And as surfing grows in popularity and institutional capital enters the fray, it seems almost inevitable that surfing will face its own cultural crisis as newcomers to the surf park industry—with deeper pockets and cheaper capital—attempt to break into the metaphorical lineup long dominated by industry veterans. Other sports that have rapidly popularized in recent years don’t have surfing’s culture, language, and millennia-long history—nor its rabid defenders.
But to industry veterans’ credit, they’ve made a point to emphasize sustainability and culture in the first generation of commercial surf park developments—those that are likely to set the tone for future projects.
Water usage, in particular, is a hot-button issue. “The industry came under some hate a few years ago when this English comedian, John Oliver, put surf parks under the blowtorch in one of his episodes,” recalls Ponting. “He called it ‘monumentally stupid’ to build surf parks in Coachella valley while ignoring that the average surf park uses the same amount of water as one or two holes of golf. Now expand that to 95 golf courses in the Coachella Valley. How much water is each golfer using versus each surfer?”
(Editor’s note: I believe the quickest way to disabuse yourself of the notion that John Oliver is thoughtful is to watch an episode in which he covers a topic where you have personal experience. When formulating Thesis Driven, “avoid John Oliver takes” was one of my key principles.)
Given the concerns, sustainability has become a focus area of surf park technology companies, with platforms competing on how little water and energy they can use. “The interest comes from a number of places,” says Ponting. “One is cost savings. But in order to get entitlements, developers have to have an authentic story to the local government to assuage the concerns about the environment and local community. Power use, water, and how you’re going to integrate into the community.”
Surf parks are also emphasizing surf etiquette in their instruction, attempting to bridge the surf park experience with the in-nature version.
“People surfing at surf parks will also find themselves at a beach someday and will want to know how to navigate it without getting punched in the face,” explains Ponting. “They’ll need to know about surfing etiquette, how to be around other people. How do you take turns? It’s another opportunity to keep it rooted in surf culture and opportunity.”
“The further removed the financing of surf parks gets from the origin of surf, the more danger there is,” says Ponting. “But if the industry is respectful of this ancient sport, we should be in good shape.”
—Brad Hargreaves
If you’re interested in learning more about surf parks, consider attending Surf Park Summit November 5-7th to hear my talk. Click here to express interest in attending.