As developers rush to meet the demand of super rich Asia travelers, they'll need to work with local governments and businesses to guarantee growth is sustainable and beneficial in the long term.
Marina developers in Southeast Asia are racing to build berths to address the latest problem vexing Asia’s rapidly growing ranks of ultra-rich: insufficient parking lots for their superyachts.
Yacht sales in Asia currently account for 9 percent of the global market share, according to consultancy Wealth-X. While the number falls behind North America’s 44 percent and Europe’s 34 percent, industry experts expect sales to pick up rapidly within the next few years as the number of multi-millionaires in the region increases.
The boom has far outstripped infrastructure growth, resulting in some awkward moments when boats pull up to moor.
The shortage is most acute in Hong Kong and Singapore where space, whether on land or on water, is scarce and the number of multi-millionaires among the highest in the world. Singapore’s ONE15 Marina Club, where monthly berth rentals cost S$10,000 ($8,000) for a 40-metre boat, is currently at full capacity. Hong Kong’s Discovery Bay Marina Club, where berth rentals start at S$6,000 for a similar sized yacht, is also full.
“There’s always been a big dream to have an ‘ASEAN-ian’ concept in competition with the Caribbean and Mediterranean,” Bill Green, technical projects director for Camper & Nicholson First Eastern told Reuters, referring to the Association of Southeast Asian Nations (ASEAN) which groups several Southeast Asian countries.
“But there’s no real day sailing going on in the region at the moment because there just aren’t enough marinas,” he said. The distance between the marinas currently in the region makes day trips unviable, he added. Camper and Nicholson First Eastern specializes in designing and making luxury yachts in Asia.
The dearth of berths is providing an opportunity for developers such as Malaysia’s largest listed property developer UEM Sunrise, which is building facilities in Malaysia’s Iskandar region.
The area neighbors Singapore and is already home to the Puteri Harbour development.
Further north, the city of Melaka, a world heritage site, is planning to build Southeast Asia’s biggest private marina, with some 1,000 berths, Malaysian Prime Minister Najib Razak said last month. And in the popular Malaysian tourist resort of Langkawi, property firm Tradewinds Corp Bhd is developing Perdana Quay, a marina project slated for completion within the next decade.
Thailand, home to the 300-berth Ocean Marina Yacht Club, is also investing in new marinas in resorts including Krabi, hoping to lure more super-rich, big-spending tourists to its shores.
Yacht brokers estimated that the number of yachts visiting Thailand will increase 31 percent from this year to hit approximately 2,100 by 2016, according to the tourism authority.
Of that total, the number of superyachts, or those more than 24 meters long, is set to grow from 110 currently to more than 190 in the next two years, generating significant income.
There are also expansion plans for existing marinas in Indonesia, said Alan Pickering, managing director of yacht broker Pro Marine.
“Indonesia has such a wonderful cruising ground that the potential for them is enormous,” said Pickering. “But they need the marina facilities to support the growth of that industry.”
It costs around $15 billion to build a marina, industry experts say, though estimates vary widely depending on factors including shore side conditions and seabed material.
The growth prospects for yacht sales in Southeast Asia, currently among the highest in the world, are encouraging developers to make the investment.
Asia’s ultra-wealthy individuals, defined as having at least $30 million in net assets, are forecast to add $3.3 trillion to their combined assets in the next five years, more than any other region in the world, according to Wealth-X.
Another report by Cap Gemini and RBC Wealth Management last year said the population and wealth of Asia-Pacific’s millionaires grew by up to triple the rate for the rest of the world over the last five years.
“Asia is experiencing a faster growth than most parts of the world, with different markets and different levels of maturity in yachting, but all in any case with high potential,” said Carla Demark, president of yacht maker Monte Carlo Yachts.
“We have markets like Malaysia and Indonesia where there are many marinas and luxury waterfront developments being built, so we see that there are a lot of extremely wealthy people,” she told delegates at the recent Singapore Yacht Show, Asia’s biggest industry event.
Editing by Rachel Armstrong and Miral Fahmy.
Copyright (2014) Thomson Reuters. Click for restrictions.
Photo credit: Private yachts are moored in the waters of ONE15 Marina Club on Sentosa island in Singapore April 22, 2014. Edgar Su / Reuters