Gulf Craft, the Middle East's largest yacht manufacturer, is now making headway in the European market.
Wealthy yacht lovers splash out again
The super-rich sailed back to the yacht market last year after steering clear during the global economic crisis, says the manufacturer Gulf Craft.
The company, which custom-builds anything from small speedboats to superyachts more than 130ft in length, enjoyed a 40 per cent boost in sales last year after major purchasers dipped their toes in the water again.
"Even the very rich people were hesitant in the global recession and were slightly put off buying," said Erwin Bamps, the chief operating officer of Gulf Craft.
A lull in 2008 and 2009 created widespread pent-up demand, with customers finally coming back to the market last year.
Small boats and superyachts, such as the company's new Majesty 135, are selling strongly as the global economy recovers, although mid-range products continue to struggle as the upper-middle class remains reluctant buyers, said Mr Bamps.
"After the global recession, the very rich are looking at alternatives when buying boats, rather than going with the first company they see," said Notis Menelaou the sales director of Gulf Craft.
Growing from about 30 per cent of yachts sold worldwide in 2008, Europe now accounts for 50 per cent of Gulf Craft's total sales as buyers look for cheaper alternatives to traditionally dominant domestic European companies.
The company believes it can offer a luxury yacht at the same standard as other manufacturers, but at a 30 to 40 per cent discount.
At its factory in Umm al Qaiwain, the Middle East manufacturer has lower employee costs than European competitors and pays no tax.
Gulf Craft also has full control of the production process from start to finish, so it does not have to use sub-contractors that charge a high rate for their services.
But the company has also had to offer deals to persuade clients to buy again.
The Majesty 135 will sell for US$17 million (Dh62.4m), but even smaller boats cost more than that in Europe, said Mr Menelaou.
During the boom years of the global economy, the availability of cheap credit made luxury yachts tempting purchases.
According to the Superyacht Intelligence Agency, part of The Yacht Report Group, the number of vessels delivered fell to 206 in 2009 from 241 in 2008, after peaking at 267 in 2006.
To cope with the downturn, Gulf Craft made about 300 unskilled and semi-skilled employees redundant and offered lower prices for its products.
But Mr Bamps does not expect to see the stellar performance of last year repeated this year.
"We expect sales in 2011 to increase approximately 10 per cent on last year," he said. "We are trying to be as conservative as possible."
Gulf Craft is owned by two Emiratis and the Kuwaiti finance house Investment Dar, which purchased a 50 per cent stake in Aston Martin in 2007.
The 135ft Majesty will be unveiled later this year, said Mr Bamps..