In time of recession, luxury yachts and speed boats seem to stay afloat. Emirates Business spoke to some yacht manufacturers and those closely associated with the marine industry on the eve of the Dubai International Boat Show, which will be held from March 3 to March 7 at the Dubai International Marine Club, to find out more about the UAE's marine industry and see if the luxury yacht market has been affected by the recession.
Yacht manufacturers said that even though the recession has hit the global marine industry and has affected the UAE too, the industry in the UAE will bounce back faster than anywhere else in the world because of the region's inherent love for boating, its ability to bounce back and also because of the pragmatic leadership it enjoys.
Talking about the UAE's marine industry Wael Juju, CEO, Knotika Holding, said: "The UAE's yacht and marine industry is one of the fastest growing in the world. Even though we have no verifiable way of gauging the actual size of the market what we can estimate from available data is that there are more than 60,000 boats in the Middle East dedicated to leisure activities alone.
"The infrastructure in planning stages is some of the best available anywhere in the world. At no time has a country embarked on delivery of so many marinas in such a short time while incorporating them in some of the most wonderfully master planned cities which are being created in the region.
"However, I would like to point out that the biggest issue facing the marine industry today is the pace of infrastructure construction, which had been lagging behind demand before the current financial crisis. Lack of marina berths is a key limiting factor in the growth of our industry as it is the most significant barrier to boat sale. And if major marina construction works are delayed, it will naturally have an impact on the growth prospects of the industry as a whole."
Erwin Bamps, Executive Manager, Gulf Craft, said: "The shortage of mooring and berthing space in the Middle East is a limiting factor. Even though there is space in Dubai Marina but in Abu Dhabi, Oman, Kuwait lack of berthing space remains an issue."
Juju added: "Other factors, such as boat finance, rescue and salvage procedures, leisure boat licencing and law enforcement, need to be addressed as well.
"There are many factors that create a truly sustainable industry that can be a significant contributor to the national GDP. On average, each boat contributes about $15,000 to the GDP (based on US data), through services, fuel, repairs, etc."
Bamps said: "There is another factor that limits growth here and that is the fact that there are just too many rules and regulations to follow when a person wants to take his boat out for a spin. Even though I know it is done to maintain the safety of the boat owner, the fact remains that all these rules and regulations take the fun out of it. In Europe, it is not like that. The rules there are more dedicate to the commercial industry.
"For the yachting industry to grow at a rapid pace, it is necessary to ease up the rules. You should have the freedom to take your boat out for a spin whenever you want to do without any hassles. It is a toy for the owner, they need to be able to play with it.
"Also, maintenance is also a problem in the region. A luxury boat needs more maintenance facilities and better handling than a fishing boat. So the industry here has to provide for this. We are one of the major players here because we provide maintenance for the boat as well and there is a crying need for facilities here. The industry is full of promise but there is still a lot to be done." he said.
Regarding the impact of the global financial crisis on the yachting industry most of the experts feel that while the recession has hit the industry globally and the UAE has also been impacted, what works in the UAE's favour is the fact that decision-making in the country is in a few hands and quick decision-making will result in a faster turnaround for the country's marine and yacht industry.
Juju said: "While we have not experienced any impact of the downturn as yet I do believe there will be an impact.
"But throughout the world the marine industry has proven itself to be a resilient one and able to ride through tough economic times and recessions. It is important to note that boating is a passion and owners will continue to partake in this activity. Also, particularly in the UAE, because of the strong demand for boats and boating here, the extent of this slowdown should be shorter than any other area in the world."
Patrick Sulzer, Executive Manager, aQuatech Yachts, said: "There has been a massive slowdown in general in the yachting industry globally. It is not a rosy picture at the moment. The recent boat show in Miami saw a poor turnout. This region has also been affected as it is all linked to the global financial crisis, but Dubai will rebound faster than the rest of the world as decisions can be taken here faster than in any other country because of its political structure.
"The government in the UAE has the structure, tools, the organisations and the will to react quickly. That is the biggest strength of the UAE. So the yachting industry here will also benefit from this.
"Also they are making sure that any new yachting company that comes to set up its business in the UAE also sets up its production facilities here so that in the end the industry will grow larger. They are growing the industries here and diversifying the economy which is a very positive thing."
Bamps said: "As of now our order books are all full but there has been a slight slowing down in the placement of orders.
"People are renegotiating and asking for value for money and as we give value for money we are still doing well.
"I think the recession in a way will create more boat owners now as people don't have any other investment avenues now. So many people who would have bought a house or something else are now buying a boat.
"It also makes more business sense to buy a yacht right now as it is a good way to impress upon your potential business partners that your business is in good health.
"Also, this region has the capacity to rebound fast. Asia, Middle East, India, etc have tremendous capacity to bounce back.
"Also the pragmatic leadership of the Gulf will play the biggest role in helping this area to bounce back. The recession might slow the growth but it will not stop it."
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