Amid the glitter and glamour of the Emirates Boat Show, in Abu Dhabi, vestiges of the downturn can still be seen.
Tide starts to turn for yacht industry
Amid the glitter and glamour of the Emirates Boat Show, which opened on Wednesday night in Abu Dhabi, vestiges of the downturn can still be seen. "Special Offer: Dh6 Million" (US$1.6m), reads a sign hanging over the Duretti 85, a 25-metre superyacht parked at the Abu Dhabi National Exhibition Centre marina.
"It's the recession," explains Shaju Sreedhar, the purchasing manager at Dubai Marine, which makes the Duretti. Just two years ago the boats, with luxurious entertainment systems, dining lounges and other comforts, were priced at Dh8m. Similar promotions were displayed in Boat Trader magazine, where advertisements were emblazoned with "Big Discount" and "Reduced Price". The boating industry is just beginning to emerge from the downturn, manufacturers say. While the extremely wealthy are still buying high-end boats worth millions of dollars, sales of smaller boats aimed at the middle and upper-middle class were just beginning to recover.
"The rich are still rich; the middle class are strong but scared," says Francesco Pitea, the general manager of the yacht builder Sunseeker Middle East. Mr Pitea says boat sales tripled over the five-year boom between 2003 and last year. Luxury goods such as yachts were swept up in the decade's extraordinary economic boom, propelled by the availability of cheap credit. "We are in a transitional period around the world now," says Mr Pitea.
Nasser al Shaali, the chief executive of Gulf Craft, says: "Life is slowly trickling back into the market." Gulf Craft, which has a boatyard in Umm al Qaiwain sold 800 boats at the peak of the market in 2007, but the maker of fibreglass crafts produced about half that number last year. This year overall deliveries will grow slightly, with sales having picked up beyond expectations in recent months, Mr al Shaali says.
To cope with the downturn, Gulf Craft made about 300 unskilled and semi-skilled employees redundant, but now the company has started rehiring again, he says. Boating exhibitions are helping to rekindle interest in yachts and yachting culture, says Wael Juju, the chief executive of Knotika Holding, the organiser of the boat show. Mr Juju calls the event, which runs until tomorrow, "an important catalyst for the government to support as it's the most efficient way to promote yachting".
Attention is slowly shifting to the capital after the completion of the Yas Marina, which opened last month as part of the inaugural Formula One Abu Dhabi Grand Prix. Sunseeker plans to open a sales and support office in the UAE capital after clinching two big sales here worth more than £5m (Dh29.8m) each. Mr Pitea credits the new marina for whetting the appetite of boat owners in the capital. "We believe Yas will be the new happening place for yachting in the Emirates."
There are plans for about 5,000 berths to be created in the emirate within the next five years, marina builders have said. A lack of available berths has been one factor constraining the market for yachts in the UAE, Mr al Shaali says. "The new marinas can't come soon enough, for the sooner you have berths, you have infrastructure to support the industry." The boating culture could also be stimulated by rules making it easier to register boats. Yesterday, several government agencies signed a memorandum of understanding over the registration and licensing of recreational and fishing vessels, as well as jet skis in Abu Dhabi.
The efforts should result in the creation of a single office for registering, licensing, inspecting and searching vessels. Any efforts will be welcomed by Mr al Shaali. Boating in the Emirates can often involve "quite a bit of paperwork", he says. email@example.com