Demand for pleasure craft and customised commercial boats is expected to double in the next two years as a host of waterfront residential and commercial projects in the GCC near completion.
Palm Marine, based at the Jebel Ali Free Zone, is one of a number of boat manufacturing companies in the region that are racing against time to beat the anticipated growth. "The current supply of boats is not enough for the existing demand," CEO Simon Honeybone told
Emirates Business.
"But we expect an overwhelming demand for pleasure and commercial boats in the next two years."
The company is in the process of greatly increasing its production capacity. Next year it will start developing a 40,000 sq m site next to its existing 32,000 sq m yard and in 2010 construction work will start on a 40,000 sq m plot in Dubai Maritime City. "We will double our capacity in the next three years," added Honeybone. "Our target is to ensure that local demand is met by local supply but we also want to maintain our strength in the market." The company expects a year-on-year growth of 100 per cent once all its new facilities are up and running. In order to meet demand it recently set up a production line enabling it introduce to manufacture on a larger scale rather than build each vessel individually.
Palm Marine was formed in 2003 by Dubai World to cater for the rising demand for boats as Dubai started to develop its marinas.
The company is part of Dry Docks World and creates top-end leisure yachts, commercial craft and submersibles. The company regards the Middle East as its core market but has adopted an international approach and recently rebranded itself to create a more international image. Palm marine sells a third of its products in the UAE, another third elsewhere in the GCC and the remainder in the international market. "We want our brand to be known only in lucrative markets – areas where there is good value for money.
"We have a team of experts who help to analyse market trends. We also regularly contact estate agents to find out about any future waterfront developments - this helps us to assess the demand for boats. We also contact government agencies to establish their future need for support vessels."
There are currently 40,000 marinas in the GCC either under construction or complete, and 10 per cent of the total current world leisure boat production would not be enough to fill them all. Dubai's coastline, which currently stands at 72km, will reach 1,500km in 2010 once a number of waterfront projects currently under construction are completed. This is expected to further demand for leisure and commercial boats.
Pleasure boats as well as commercial vessels such as fireboats, water-taxis and ferries are in short supply while demand is growing continually. "Palm Marine is ready for the emerging landscape of Dubai. The new shorelines and waterfronts offer immense possibilities for marine leisure. The demand for luxury yachts and commercial boats will rise in line with the expansion of the coastline. Ocean living will be an integral part of Dubai's future."
The company is preparing to cope with a forecast rise in demand for other craft, including service vessels, marine ambulances, patrol vessels and trash collectors.
Honeybone says clients in the GCC prefer to buy boats that are built locally rather than having to wait months for deliveries from Europe. A number of local customers at the recent Kuwait boat show indicated a preference for locally made boats. The company – while keen to sell its boats overseas - has no plans to expand its production facilities beyond Dubai by creating satellite construction yards in other countries.
"All our manufacturing will continue to be carried out in Dubai and we have no plans to do it elsewhere. We export completed boats to world markets. We have dealers in Kuwait and Dubai and are negotiating to establish dealerships in 12 other countries."
Palm Marine has sufficient funding from Dubai World and company returns and so does not need to borrow from banks to pay for its forthcoming projects.
"However, as demand increases, we might see the need to increase our capacity further and might then consider borrowing to fund expansion programmes."
The demand for pleasure craft is likely to trigger competition as more companies enter the boat construction industry, but Honeybone believes only those that offer quality products will survive.
"Buyers are increasingly looking at quality regardless of the price. We believe that our ability to provide quality and at reasonable prices will keep us in the market."
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