Rashid, who owns a property company in Dubai, bought a new 50-foot luxury yacht more than two years ago for Dh10 million (US$2.7m). That was back in Dubai's heyday, when property prices were soaring and taking clients for trips on a luxury boat was a sure way to impress. Rashid had money to maintain the expensive asset and, moreover, it helped him to seal multimillion-dirham deals.
Today, he is willing to let the yacht go for just a third of its original value even though the boat has been well looked after with no expense spared and is in pristine condition. Boat dealers say they have seen an increase in the second-hand market as people look to free up cash by selling their boats and bargain-hunting buyers try to pick up some great deals. Michael Derrett, who runs a consultancy specialising in market research and business planning for the marine leisure industry, says new boat sales in Dubai are down by about 75 per cent compared with 18 months ago.
"In the short term it's tough for the industry," Mr Derrett says. "The medium outlook in two to three years is very dependent on the recovery of the local economy, which in turn depends a lot on the worldwide situation." But Dubai's boating potential over the next couple of years is also likely to be hampered by stalled marina developments. "One of the main reasons for the development of marinas is that they run in harness with property developments because they enhance the value by creating a lifestyle," Mr Derrett said. "Once the property market starts growing again, marina projects will come back on stream."
Four years ago, Island Global Yachting (IGY) linked up with Nakheel in a plan to build up to 40,000 berths in Dubai, a big increase on the few thousand the emirate currently boasts. The companies said at the time: "IGY is now the exclusive provider of design, development and management services for all Nakheel marina properties, including its signature developments, The Palm Islands, The World and Waterfront, the largest waterfront development in the world."
The Anchor marina at the Palm Jumeirah island was one of the projects Nakheel was supposed to open in partnership with IGY. A few months ago, however, the companies dissolved the agreement. A number of other projects that had a marina element to them in Dubai have also been put on hold. Both Nakheel and IGY declined to comment directly on the break-up of the partnership. In a recent statement, Nakheel would only say: "We are looking forward to opening Palm Jumeirah's Anchor marina in the coming months. Nakheel remains committed to working to meet the continued demand for berthing space in Dubai. Marinas are an integral part of our iconic waterfront projects and we will continue to develop top quality marinas at pace with those projects."
Michael Horrigan, the chief executive of IGY Europe, Middle East and Asia, says: "We continue to have an amicable and professional relationship with Nakheel, however we can confirm that IGY is no longer involved in and does not manage Anchor marina on the Palm Jumeirah." Mr Horrigan says IGY is still involved in a number of other projects. "IGY remains a very active participant in the developing marina industry of the GCC and is involved with a number of projects in the region including projects in Dubai, Abu Dhabi, Qatar and Bahrain."
Industry experts agree that there is still room for Dubai to expand its supply of berths for the longer term. Not surprisingly, prices have been kept elevated because of the limited numbers of berths, with a spot for a 50-foot boat at Dubai Marina costing Dh44,100 a year, not counting the compulsory joining fee for the yacht club of Dh24,000 and an annual club membership fee of another Dh24,000. "A few years ago there was a severe dearth of berths in Dubai, so the only options were to go to neighbouring emirates to get a berth or postpone buying a boat," says Phil Blake, the marina manager at Dubai Festival City, which is operated by IGY.
"A lot of expats made do with a smaller day boat that they could put on a trailer." Mr Blake says the situation has improved now, but it is still hard to get a berth. Dealers say there are still lengthy waiting lists for the popular marinas in Dubai. "We haven't reached the point yet where they're guaranteed a spot wherever they want, but they now have a little bit more flexibility," Mr Blake says.
Dubai Festival Marina opened its quayside berths free for day visitors this summer. The marina is trying to encourage boaters from other marinas in Dubai or further afield to tie up by the quayside, jump off and make use of the shopping centre, restaurants, cinemas and other facilities at the retail centre. For now, the only caveat is the opening hours of the floating bridge, which restricts the times during which boats can travel up the Creek to the marina.
Mr Blake agrees that the current climate is not favourable for the industry. "Yacht sales have dropped off, but I think that everyone in the yacht industry sees this as a temporary lull. There are a lot of people out there who have the ability and the motivation to own a yacht, but right now they're just biding their time and seeing how things go." For prospective buyers, meanwhile, there are a lot of good deals to be found.
rbundhun@thenational.ae
