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Booming super-yacht industry offers hope for Gulf economies

  • Story Highlights
  • The inaugural Abu Dhabi Yacht Show was held this month
  • Super-yachts are growing in popularity in the Gulf region
  • Abu Dhabi wants to become world's top super yacht destination
  • Experts say it is unlikely luxury yacht industry will have big impact on the economy
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By Mike Steere
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LONDON, England (CNN) -- As many of the world's industries struggle in the face of global economic hardship, the inaugural Abu Dhabi Yacht Show went ahead earlier this month.

On show: The recent Abu Dhabi Yacht Show attracted some of the world's biggest super-yachts.

On show: The recent Abu Dhabi Yacht Show attracted some of the world's biggest super-yachts.

Showcasing some of the top super-yachts in existence, the show symbolizes a luxury industry which is still thriving in the area.

At the show, Sheikh Mohammed Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, said the United Arab Emirates is becoming one of the world's greatest super-yacht hubs.

"This show demonstrates Abu Dhabi's commitment to be recognized as a global super-yacht player at the same level as leading centers in the Mediterranean and the Caribbean," he said.

Abu Dhabi Tourism Authority chairman, Sheikh Sultan Bin Tahnoon Al Nahyan, hailed the event as proof that the region was still growing and performing well economically.

"It is a clear indication of continuing international confidence in this emirate's robust and resilient economy."

Evidence of positive developments in the region's luxury yacht industry is written all over the emirate.

In addition to the yachting infrastructure already complete in Abu Dhabi, a marina is planned on Saadiyat Island, in the historic marine district of Al Bateen.

Another marina is planned on Yas Island, where there will be a dedicated mega-yacht marina. In total, 16 new marinas are planned in Abu Dhabi in the next decade.

The inaugural Abu Dhabi show also attracted 20 of the world's top super-yachts with a combined value of more than $500 million. Most of the globe's top brokers were also in attendance.

Senior yacht broker at Burgess Yachts, Rupert Nelson, told CNN that Abu Dhabi is committing to the industry -- a move which should help the emirate stay one step ahead of other destinations.

"Across the globe this year there has been a huge slow down, but in the Gulf they don't seem to be too worried about it."

Burgess Yachts recently sold a Dubai-built super-yacht called Al Hanem for just under $20 million, he added.

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Although the industry faces a number of challenges in the Gulf region, Nelson said the growth of marinas, yacht-builders, brokers and other related business should help to create jobs.

"The size of boats there is growing, the number of yachts there is growing ... and it seems they want to continue," he told CNN.

The question on many lips is whether this growing industry could help the United Arab Emirates, and the wider Gulf region, survive the worst of the wider economic downturn.

Probably not, is the answer from regional business experts. But it may ease some of the pain

Middle East business expert and author of "Dubai & Co: Global Strategies for Doing Business in the Gulf States," Aamir A. Rehman, told CNN there are reasons for both optimism and pessimism in the Gulf luxury sector.

Earlier this year Rolls Royce reported Abu Dhabi and Dubai had become the biggest and second-biggest markets for their cars after a 48 percent jump in sales during 2008 compared with 2007.

Rehman said Rolls Royce's results of were promising for the wider luxury industry -- and could also indicate potential growth for the super-yacht industry.

"Transportation and the entire infrastructure around transport are important to the Gulf Cooperation Council (GCC). There's significant investment being made in transportation, suggesting potential for growth in related industries."

However, despite the high-profile nature of the luxury yacht industry, Rehman feels there are still limitations.

"The Gulf is a relatively small market overall and the number of high-end buyers, while substantial, may be limited compared to regions with larger population bases."

Liz Martins, head of Middle East and North Africa in the Country Risk department at Business Monitor International, told CNN the current economic climate would have a lasting impact on the luxury sector.

"I think it's an area where people will cut back. There's still a lot of wealth out there but some of these people have lost a lot of money."

Martins said the boom period of the last decade had reached unsustainable levels of growth and, although the Gulf region doesn't have a "saving culture" she predicted some changes.

"We're not forecasting recession for many Gulf states ... but the last few years have been debt-fueled boom and I just don't see things getting back to what they have been."


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