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Yachts: Leap of faith

Lebanon’s boating world remains defiantly buoyant in uncharted waters

by Zak Brophy

Few displays of the luxurious lifestyle turn heads quite like a top-of-the range boat, and it is the colossal mega yachts that tend to elicit the most attention. These floating mansions can come custom furnished with swimming pools, helipads, indoor gyms and even mini submarines. But is size everything?

For Alain Maaraoui, founder and chief executive officer of Sea Pros Yachts, it is quality and not size that defines luxury. “We have boats that are 8 meters and cost over 280,000 Euros [$396,000]. It’s not a matter of size; it’s a matter of real luxury,” he said.

The Lebanese market is an important hub in the luxury boat trade, but as the 2011 season gets underway it is having to navigate some choppy waters. Political upheavals at home and across the region, slowing growth in the economy and a sluggish start to the tourist season don’t augur well for the coming year.

Showboating

At the end of May, IFP Expo and Messe Dusseldorf hosted the Lebanese maritime trade show, Beirut Boat 2011. Representatives from the top 20 international brands were among the 130 exhibitors who came to show off their wares. Many of the 28,000 visitors to the event at Joseph Khoury Marina in Dbayeh would have come purely to marvel at the opulent grandeur of the mega yachts or to appreciate the finesse of the classic brands. But it was the deals sealed with the serious shoppers that set the tone for the coming year’s business.

Overall, the event proved to be a success despite the prevailing climate, according to Joelle Ghannam, IFP Expo project manager. “More than $100 million in sales were made during the event. There are still big spenders. A $12 million boat was sold on the first day,” she said.

The interest shown in the large boats meant good business for Sea Pros’ Maaraoui. “We were surprised to receive high demand during the show for our mega yachts,” he said.

While the majority of the clientele were Lebanese, 12 percent of the guests came from the Gulf. Ghannam believes it is more than just the liberal lifestyle in Lebanon that attracts buyers from the Gulf. “Many of them prefer to moor in Lebanon. They have more months in which they can sail. It is too hot in the Gulf,” she said. Despite the relative success of the boat fair there is still some trepidation in the market.

“Business is not like last year. We are selling less. But you have to consider what is happening around us,” said Firas Khalife from BluePoint Yachting Lebanon.

Alain Maaraoui explained that the financial crisis had negatively affected trade with Europe. “Nowadays, even in Europe it’s much harder to finance a boat because of the global financial crisis,” he said. “The banks are placing many more restrictions.”

Blue Point Yachting sells solely to a Lebanese clientele and Khalife doesn’t see access to finance as a real impediment to business. “There is no problem with finance in Lebanon. There is plenty of money in the banks. If you fit the banks’ criteria it’s no problem,” he said.

For those seafaring folk who don’t want, or can’t afford, to spend millions on their own floating palace there is always the option of chartering. However, some charter companies have complained of a leaden start to the season.

“There are some problems because of the political situation. So far we have not had a single charter for one of our big boats,” said Randal-Haj of Dolphin Team Yachting. “We are in June and the charters normally start in May, or even earlier.” The vitality of the charter market is closely linked to the influx of tourists. According to the Ministry of Tourism, arrivals in the first quarter of 2011 were down 13 percent compared to the first quarter of 2010.

Hrair Tasslakian, part owner of Dbayeh fishing club, said this year’s business has been coming from locals and Lebanese returning from abroad. “As for the big spenders who come from the Gulf or Europe we haven’t seen them yet. We haven’t seen people that come and spend $10,000 dollars in a day,” he said.

Missing marinas

Many of the players in the industry are concerned that there is a lack of marina development in Lebanon. “The mooring space is almost non-existent now. This is a problem for boat sales, definitely. By next year there will probably be no space at all,” fretted Firas Khalife.

This is particularly a problem for large boats, a market that several agents are hoping to develop in Lebanon. “Now Lebanon is only a market for smaller boats, 50 to 80- footers [15 meters to 24 meters]. Anything more than 90 [27 meters] and it’s much tighter, but it’s growing. In two years Lebanon will have more 100 footers [30 meters] and plus,” said Jimmy Frangi, chief executive officer of Sovereign Sea Hermes.

There was a similar problem of inadequate marina space in the 1990s before the construction of the Joseph Khoury Marina in Dbayeh and Solidere Marina in Beirut.

A new complex in Jiyeh with a capacity for 90 yachts is also slated for completion this month.

Where yachters do find a mooring, they seek comfort, class and style onshore once the boarding ramps are lowered on to terra firma. In a bid to boost the appeal of Lebanon as a luxury yachting destination of choice, Beirut Waterfront Development — a joint venture between Solidere and international real estate development firm Stow Capital Partners — is investing somewhere in the region of $150 million to build Zaitunay Bay.

Located on 20,000 square meters of waterfront land by the Beirut Marina it will incorporate a plethora of restaurants and shops, 14,000 square meters of high-end residences and an exclusive yacht club.

The mood remains defiantly buoyant in the Lebanese luxury yacht market but how long it can stave off the encroaching malaise in Lebanon and the wider region remains unclear. BluePoint Yachting’s Khalife warned that “nobody really knows what’s going to happen.”

“You cannot do any long-term planning in the current climate in and around Lebanon,” he said. “We are playing it by ear.”

 

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Zak Brophy

Zak Brophy was Executive's Economics and Policy Editor from 2011 until 2013.
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