The marine merchant

As CEOs in the region look for increasingly luxurious ways to wile away the hours spent away from the office, a rising number are getting their feet wet, raising anchor and taking to the high seas. Andrew Mernin sets sail with Ali Al Jafla, managing director of Sunseeker Middle East as he rides the waves of the buoyant regional yacht industry

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By  Andrew Mernin Published  May 11, 2006

|~||~||~|Sitting on a plush leather sofa, surrounded by luxurious décor facing an enormous Plasma TV screen, it is easy for a landlubber to forget that we are floating in the Arabian Gulf. But the exuberant cabin of the US $3.5 million (AED22.95 million) Sunseeker 82 yacht, bobbing in Dubai Marina, is just one of the reasons why so many CEOs are gaining their sea-legs and contributing to the region’s growing yacht market. “I approached Sunseeker eight years ago but they weren’t sure about the Middle East. I managed to convince them to come over here by giving them an idea about the market, how it was growing and all the new things that were going to happen,” says Ali Al Jafla, managing director of Sunseeker Middle East from the hull of the company’s premium vessel. “When I brought the first Sunseeker yacht here, it sold in a week. Today we sell eight to ten boats annually, making up to US $24.5 million a year.” Sunseeker originated in England over 40 years ago as Robert Braithwaite launched a small family business with a workforce of seven after building his first boat. The company now has 1505 employees and an annual turnover US $301 million. As the exclusive distributor of Sunseeker yachts in the Middle East, Al Jafla works very closely with the company’s UK headquarters providing updates on the region’s market. The Middle Eastern branch of Sunseeker is operated in partnership with the Ilyas and Mustafa Galadari Group, the company behind the City of Arabia project that will be part of the enormous US $4.9 billion Dubailand development. Before joining Sunseeker, Al Jafla spent three years as a rally driver as well as being involved in his father’s family business, but insists that his passions lie at sea rather than on the road. “My father bought a 14 foot boat when I was 12 years old, so we learned how to sail and go out to sea, and I have been hooked up to the water ever since.” “I’ve always loved boats and that is why I decided to approach Sunseeker.” And the partnership between the company and Al Jafla seems to have paid dividends as widespread marina developments in the Middle East have opened the floodgates to the yacht industry. “In the past, the challenge has been to bring boats here while the marinas were not yet ready. We are progressing side-by-side with all these projects in the water. We depend on them because they are going to be the base and the principal home for these boats,” says Al Jafla. New marina developments have been well publicised in Dubai, which according to Al Jafla, is “two years ahead of the rest of the Middle East”. In addition to Nakheel’s trio of ‘Palm’ projects, the construction giant is also building ‘The World’ at a cost of around US $1.8 billion, consisting of 300 separate islands spanning nine by seven kilometres covering 593 million feet. Currently under construction in Doha is the US $2.5 billion Pearl-Qatar man-made island with numerous tourist and residential facilities, which will undoubtedly encourage potential boat-owners to take to regional waters. Saudi Arabia, a market that Al Jafla is “looking into developing,” is also experiencing a huge surge of interest in marine development. The multi-million dollar Al Bundoquia Islands project 26 km south of Jeddah will extend over 21 square kilometres (sq km) and will include hotels, resorts, marinas and other luxury facilities. Also based in Saudi Arabia is King Abdullah Economic City, a US $26.6 billion project to be built in the Red Sea North of Jeddah, which will have a 2.6 million sq m seaport as its centrepiece. While improvements to shoreline infrastructure could act as a catalyst for yacht sales, however, Middle Eastern banking practices could prove a hindrance. With yachts costing as much as US $50 million, even the wealthiest of chief executives may need to rely on borrowed bank finance to invest in their dream vessel. Al Jafla explains, however, this is a service that many financial institutions in the region are reluctant to offer. “Today, banks in the Middle East finance cars, property, or anything else you require, but when it comes to the marina it’s a totally new business to them. A few European banks are now moving here and looking seriously at it because it’s a multi-million pound business. “We have sent some banks information to educate them about the situation and we have had some difficulties, but they will be overcome and we will announce which bank we will finance with very soon,” he says. And there are signs that things are changing. Speaking at the Dubai international boat show, in March, Edwin Bamps, executive manager of Gulf Craft, a producer of luxury yachts in the Middle East, said: “Buyers previously had no alternative but to find the full purchase price, but even the restricted availability of finance is now bringing boat-ownership within the reach of many more people.” Last year, the National Bank of Abu Dhabi launched a yacht finance scheme offering loans of up to US $1.4 million, while HSBC Middle East has also recently launched a range of boat finance packages. Al Jafla also believes that things are moving in the right direction. “At the moment we are about 60 or 70% of the way there and I think that over the next year all the banks will be ready to finance boats.” Sunseeker’s global sales have increased by over US $185 million during Al Jafla’s eight year tenure as skipper of Sunseeker Middle East. At the recent Dubai boat show, Sunseeker sold a Predator luxury yacht and a Manhattan 50 craft on the first day, in addition to lining up a significant number of orders helping to take the total sales figure for the show past last year’s US $100 million mark. Al Jafla’s secret technique, which has helped contribute to these impressive sales results is to “get [the customer’s] feet wet. If you can get them in a boat, they will realise what they want.” Al Jafla believes Sunseeker, which according to its brochure, is ‘synonymous with luxury, performance and captivating beauty,’ fits perfectly with the increasing demands of customers in the Middle East. “The beauty of this market is that people are getting educated day-by-day and, in the Middle East, quality of life is improving all the time so they always want to get the best, whether it’s in property, cars or boats. The challenge for us is to get with these sorts of people.” While the prospect of leaving the office behind and sailing off into the great deep blue may whet the appetite of hard-working CEOs, the process of buying their first yacht can be a daunting task. According to Al Jafla, however, if the right measures are taken, it can be plain sailing, even for the absolute beginner. “It’s an easy process for a CEO to buy their first yacht as the dealer who sells you the boat will give you basic sailing knowledge and take you through the various stages. “Part of our job is to provide you with all the information and training, help you to register the boat, and take care of it on a yearly contract basis.” In choosing a suitable sea-faring craft, Al Jafla highlights the need to tread carefully before making what can often be a huge personal investment. “Before buying a yacht, you should take your time and ask yourself what purpose you will be using it for, how many people you intend to carry on-board and decide what your budget is. This is the key. “You should also look at the resale value. If you’re going to invest in a boat, you need to know how much you’re going to lose in the first year and how much in the second year. This can vary a lot from brand to brand.” And, although the most expensive boat sold by Al Jafla cost over US $19 million, he says that CEOs with more modest means can also afford to take the plunge and buy a waterside dream. “People always think of Sunseeker as selling expensive boats, but we can work with any budget. We have boats ranging from 34 ft to 120 ft long.” So, as construction companies continue to build huge offshore developments and banking laws are gradually eased, there seems to be no better time for chief executives to take the plunge and set sail in Middle Eastern waters.||**||

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