Made in UAE: Gulf Craft puts the 'super' into yachts

The world may be in the economic doldrums but the mega-rich are still craving expensive toys.

Those for whom the pocket is effectively bottomless see nothing especially unusual in splashing out on a 24 carat gold interior for a superyacht or ordering a boating replica of the Star Trek Enterprise.

These outlandish requests and high demand for superyachts has helped to keep the Umm Al Quwain-based boat manufacturer Gulf Craft afloat, despite the global slowdown.

The company was well placed to take advantage of an uptick in interest in superyachts, not only with orders but also size, according to Erwin Bamps, the Belgian chief executive of Gulf Craft. “If we did not have the superyachts that we have today, we [would] probably be out of business by now,” he says.

A superyacht ranges between 30 metres and 50 metres in length and anything bigger is classified as a megayacht.

The cheapest boat Gulf Craft manufactures is the 9 metre Oryx 27, which would set you back Dh250,000, while the priciest is the Majesty 155, selling for about Dh90 million, depending on specifications.

The company is already working on unveiling a yacht bigger than the 47 metre Majesty 155, which was launched last year and sold to a Gulf investor, at the Monaco boat show in September. Currently the company is building another Majesty 155 for another Gulf investor and a third is under negotiation. Mr Bamps declines to give the price of producing these luxury yachts.

Globally, more than 450 motor yachts were sold last year, bringing more than US$3 billion, according to the broker Camper & Nicholsons. The number of yachts stretching more than 40 metres-long increased by 7 per cent last year from 2014.

Surprisingly the “bigger and better” trend began in the midst of the 2008-2009 financial crisis, says Mr Bamps, 47, who first joined Gulf craft in 2002 as executive manager.

“Crisis usually leads to the polarisation of society,” he says. “The richer get richer and a lot of the middle class gets a little poorer and what we see is the widening of the gap between the rich and poor.”

The yawning gap is reflected with the value of private wealth in the Middle East and Africa region, which is forecast to grow to $11.8 trillion by 2020 from $8tn last year, according to consultancy Boston Consulting Group (BCG). Millionaire households, which accounted for more than half of the region’s wealth last year, are expected to boost their share over the next five years.

Demand in the Arabian Gulf helped Gulf Craft to log in a 5 per cent increase in revenue last year.

The Middle East region contributes 50 per cent of revenue due to the region’s affinity to superyachts, while Europe chips in between 20 to 25 per cent share and Asia Pacific and South East Asia with 25 to 30 per cent.

Already the world’s largest superyacht, the 180-metre Azzam, is rumoured to be owned by an Abu Dhabi resident, surpassing the Russian billionaire Roman Abramovich’s 162.5-metre Eclipse, according to Boat International. The third largest such ship is the 162-metre Dubai, owned by Sheikh Mohammed Al Maktoum, Vice President and Ruler of Dubai.

However, 2016 looks grim, with flat revenue forecast for the boat maker amid political and economic uncertainty.

“It is the medium size yachts between let’s say $0.5m to $5m that have seen quite a decrease,” says Mr Bamps, who has an electronics engineering major and worked in the telecommunications industry prior to joining Gulf Craft.

He adds that the bracket of customers for such vessels are more affected by market uncertainty as they may also be paying for their children to attend university as well mortgages, for example.

To deal with the world’s economic snooze, Gulf Craft plans to trim the number of middle-sized boats that are not faring too well and focus on superyachts and small boats. “The idea is for Gulf Craft to be able to flex its muscles depending on where the market leads us because the boat market is not a mass market,” he says.

The company is banking on future growth and is set on expanding its shipyards in the UAE and the Maldives to handle larger inventories.

“We may have a flat year, but we are doing quite well compared to our peers and we are actually preparing for the next growth phase,” says Mr Bamps. “So we are quite bullish about what we see in 2017 [and] 2018.”

At a time where some players are scaling back, Gulf Craft plans to boost investments through self-financing in order to grab a bigger market share. Mr Bamps declines to give a figure for investments.

With a 1,600-strong workforce, Gulf Craft churns out on average 400 boats a year. That is a far cry from its humble beginnings as a maker of fishing boats when it was set up in 1982 by the Al Shaali family.

“We see demand for our product growing drastically on a global scale and that is great news, which means we can leverage risk,” says Mr Bamps. “This has allowed us to invest with a little bit less worry.”

Gulf Craft is currently among a league of global manufacturers of luxury yachts and counts Italy’s Azimut/Benetti Group and Ferretti Group Engineering, as well as the UK’s Sunseeker and Dutch Feadship De Voogt among its rivals.

Italy, the Netherlands and Turkey are the top three luxury yacht builders, according to Boat International.

But with its course well plotted, it seems Gulf Craft can be confident of arriving safely at any suitably lucrative desitinations.

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Dania Saadi

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