Push the boat out
First it was private jets, now super yachts are up for "fractionals". A joint ownership model that allows people to co-own status symbols that cost a couple of millions of dollars, the concept of fractional ownership of super yachts is gaining ground.
"It is on the rise worldwide," says Erwin Bamps, the Executive Manager of Gulf Craft Inc, one of the largest manufacturers of boats and yachts in the UAE.
"It's not a very common topic in the world of small boats with small budgets but for super-yachts where owners have access for those few weeks of a year they are looking for."
Often called the high-end cousin of timeshare, where investing partners have the right to use an accommodation for a pre-determined period of time, the idea of fractional ownership has been popularised by NetJets, the plane-sharing firm owned by Warren Buffett's Berkshire Hathaway.
Under the scheme, a fractional aircraft owner purchases an interest in a specific, serial-numbered aircraft. The size of the undivided interest purchased is directly proportional to the number of hours the buyer flies in a year.
Netjets Inc, which recently announced plans to boost its Middle East presence, says it is investing $1.5 billion (Dh55bn) in its fleet in the region.
For boats, the concept, says Gulf Craft's Bamps, is still very new, even around the world. According to one official of a company that deals with the sales, maintenance, warranty and charter of boats, the concept of shared ownership has not gained momentum in the UAE, but will eventually take off.
"Before that, we need to raise the profile of the boating lifestyle. There are still a lot more marinas to come on board. It's still early days," says Vicky Farrow, a sales manager at Art Marine, headquartered in Dubai. "Licensing and insurances for instance, are still not as regulated as they are in, say, Europe."
Farrow, whose company launched a fractional ownership concept called Club Azure recently, says her firm has now decided to take a "different route".
"We wanted to develop our charter division and marina management, which were doing very well. So it made more sense to focus there," she says.
The biggest drawback to the growth of this concept, according to Bamps, is more psychological.
"If you have $1 million to spend as a potential yacht owner, do you prefer to buy a smaller yacht for that entire budget, which you can entirely call yours or do you prefer to impress your guests when bringing them aboard a $10m vessel that you share with nine different owners, but which you cannot claim to be completely belonging to you?" he asks.
Bamps' company this week announced that its Marine Finance division would offer loans of up to Dh3m to finance the purchase of selected boats. The idea was to make boat ownership more accessible in the current climate, it said.
But one boating enthusiast who has unsuccessfully tried to push the boat sharing concept in the UAE, says it will take a while for it to take off.
"A decent boating environment does not exist here yet for that," says the company's manager who has set up a website for that purpose. "We started about a year ago and had a huge response but it is yet to begin operations because there's been so many roadblocks. There are absolutely no berths available and the cost is extraordinarily high. Also, the red tape imposed by the Coast Guards is extraordinarily complicated."
Saeed Harib, the COO of Dubai International Marine Club, Mina Seyahi, says his organisation fully supports the development of the concept here in the UAE. "It's been around for many years," he says. "A lot of boating companies here are expanding and are offering interesting concepts."
Harib's organisation will play host to the 17th edition of the Dubai International Boat Show next week where more than 721 companies from around the world will showcase the latest offerings in the marine industry.
"The opportunities remain extensive in this region and the show is well positioned to provide the international marine industry the boost of confidence it is seeking at this critical time," says Helal Saeed Almarri, the CEO of Dubai World Trade Centre (DWTC), which organises the annual event.
Trixee Loh, the Senior Vice President of exhibitions and events management at the DWTC says while fractional ownership is an interesting option, her organisation has no plans to "institutionalise" it. "I think we will leave that to the boating companies.
"As organisers, our focus is on providing them the platform to showcase the best they have to offer."
Emirates Yachting, which distributes smaller boats in the region, will also participate at next week's show, which will run from March 3 to 7.
Managing Partner Andy Sixsmith believes that those looking to buy into the concept will only be interested at much larger boats. "They are the ones who would want the big yachts, which sometimes cost the same as the jets. And that's a small market."
But the boating enthusiast, who prefers we do not use his name, says the concept is "perfect for the man of the street". "It's for those that want to enjoy the lifestyle of owning a boat but can't justify the time and expense," he says. "And it makes sense because in any marina around the world, boat usage is very light. For example in Australia's Gold Coast, an average boat user will use his boat maybe eight times a year. It's a large investment to have for a small usage.
"That's why fractional ownership is a new and exciting alternative to single boat ownership."
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