Dubai: The UAE boat and yacht industry is yet to bounce back from the market crash that gripped the global economy five years ago.
Ross Gill, Regional Sales Manager at Al Futtaim Marine, said the industry was still in the recovery phase but wasn’t experiencing growth like other sectors in the local economy.
“The housing markets are telling one story but we’re not seeing the trends reflected in the boating manufacturing and services industry,” he said.
Al Futtaim Marine is the exclusive dealer for Larson Boats in the UAE.
The industry is witnessing a slow recovery, Gill said, but the industry had yet to reach pre-2008 levels.
The large 80-120 foot boat sales are performing well but the market is small, Gill said.
Owners of large luxury yachts make up a small market and are generally viewed to be less affected by economic constraints than the smaller 17-30 foot boat market consumer.
The first sign of recovery will be when then the small boat sales pick up, Gill said, because they are the bigger market.
Despite the slow growth in sales the services industry is performing relatively well with boat owners choosing to focus on upgrading their boats rather than replace them.
“People are fixing and painting their boats. They’re doing AV upgrades and adding new equipment,” Gill said.
Overall, the industry was performing well, Gill said, with the industry coming off of a “pretty good” tail end of last year and beginning of this year. A similar trend is expected to continue for the rest of 2013.
UAE-based manufacturer of powerboats, Al Marakeb has seen strong growth in recent years recording 75 per cent increases in sales in 2012 when compared to the previous year.
International market
The company attributes part of their sales growth to their footing in the international market.
Nour Al Sayyed, Architect and Head of Design at Al Marakeb, said 40 per cent of their sales come from outside the UAE.
Gill partly attributes industry performance to customer market confidence, stating that customer dissatisfaction with manufacturers and dealers played a role in the industry’s slow recovery.
The industry was battered by the downturn, he said. The customer wants assurances that the manufacturer or dealership will still be here in a year’s time.
Similar to other sectors there were cases of companies leaving the market once the crisis hit, Gill said, leaving customers with boats whose warranty could not be honoured.
“We still need to see confidence come back into the market,” Gill said.
New player
Al Sayyed said Al Marakeb, established in 2007, faced its own challenges as a new player during the crisis.
People were reluctant to invest in luxury items, Al Sayyed said, but said the company had undertaken diligent operations to see through the crisis.
The region has been witnessing a steady economic situation, according to him.
“As the situation picked up from the recession, people are spending more and investing more in luxury items,” Al Sayyed said.
Gill said regulations need to become more streamlined but that progress had been made.
Industry changes
However, Gill said that changes in the industry like the development of marinas had helped grow the market.
Government support of the fishing industry, including offering incentives to promote fishing in the Gulf, had contributed to an increase in the sales of fishing boats, Al Sayyed said.
Al Sayyed said the UAE as a hub for boat manufacturing industries had seen consumers turn to the Emirates for marine products.
“The country has built a name for itself being a home to leading manufacturers in the Gulf,” Al Sayyed said.
Despite the challenges on the industry, niche sectors in the luxury market continue to perform well.
The Dubai Marina Yacht Club has experienced 15-25 per cent year on year growth, Jonathan Hind, the club’s Director of Operations, said, pointing out that the industry average was 5 per cent.
Dubai Marina Yacht Club has added 70 new berths sold so far in 2013, and had 92 per cent of last year’s members renew membership for 2013. The industry average is 80 per cent, Hind said.
He added that from Dubai Marina Yacht Club’s point of view the industry is strong. However, the same cannot be said for all marinas in Dubai.
Yas Marina in Abu Dhabi has experienced similar growth outside industry expectations.
A spokesperson for Yas Marina said berth occupancy had increased by 150 per cent in 2012, compared to the previous year.
General Manager Cedric Le Rest said in a statement earlier this year that he had seen a 10 per cent increase in boat size’s berthing at the marina.
Le Rest also stated they had seen a 25 per cent increase in expressions of interest for Race Week berth rates.
Yas Marina is situated alongside Yas Marina Circuit, which hosts the Abu Dhabi Grand Prix each year.
Yacht owners can berth at the marina during the Grand Prix for a premium fee.
