Study on Boat Market in the UAE / GCC Landscape and Opportunities - Frost & Sullivan www.frost.com

 
Study on Boat Market in the UAE / GCC Landscape and Opportunities - Frost & Sullivan www.frost.com
Study on Boat Market in the UAE / GCC
    Landscape and Opportunities

                          ©Frost & Sullivan

 ©Frost & Sullivan 2018    www.frost.com      i
Study on Boat Market in the UAE / GCC Landscape and Opportunities - Frost & Sullivan www.frost.com
©
 February 2018 Frost & Sullivan

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©Frost & Sullivan 2018                                           ii
Study on Boat Market in the UAE / GCC Landscape and Opportunities - Frost & Sullivan www.frost.com
Final Report
 Study on Marine Boat Market in the GCC with specific focus on
                                     the UAE

                         Landscape and Opportunities

                                Commissioned by

                          Italian Trade Agency, Dubai, UAE

                                    Prepared by

©Frost & Sullivan 2018                                       iii
Study on Boat Market in the UAE / GCC Landscape and Opportunities - Frost & Sullivan www.frost.com
Table of Contents
TABLE OF CONTENTS....................................................................................................................................
GLOSSARY..................................................................................................................................................v
1.      INTRODUCTION ..................................................................................................................................6
         1.1 Aim and Objective of the study .............................................................................................6
         1.2 Methodology and approach...................................................................................................6
         1.3 Scope of the study .................................................................................................................6
2.      BOAT AND ITS COMPONENTS MARKET ...............................................................................................7
         2.1 Overview of the Boat market in the GCC / UAE ..................................................................7
         2.2 Boat Market Structure and Key Stakeholder Types...........................................................10
         2.3 Drivers and Restraints of the boat market in UAE over the past 3 years (2015 – 2017) .11
3.      MARKET DYNAMICS (MARKET SIZE ESTIMATES) .............................................................................15
4.      SUPPLY CHAIN ANALYSIS .................................................................................................................17

         4.1 Supply chain of the boat components market in the UAE .................................................17
         4.2 Major Suppliers of boat components ..................................................................................18
         4.3 Identification of value for Italian suppliers in the GCC / UAE boat components market ..19
         4.4 Distribution channels for boat components market in UAE ...............................................20
5.      CUSTOMER ANALYSIS .....................................................................................................................21
         5.1 Market snapshot of the addressable opportunities across the identified 5 key components
         groups in the UAE boat market ....................................................................................................21
         5.2 Overview of the customers for the various components groups .......................................21
6.      CONCLUSION ...................................................................................................................................22
7.      APPENDIX ........................................................................................................................................23
         7.1 Interviews with boat manufacturers in the UAE .................................................................23
         7.1 Key Government Bodies .....................................................................................................24
         7.2 Laws and Regulations .........................................................................................................25
Bibliography ..........................................................................................................................................25

  ©Frost & Sullivan 2018                                                                                                                             iv
GLOSSARY

Abbreviation             Expansion

        AED                                United Arab Emirates Dirham

       DCMMI                    Dubai Council for Marine and Maritime Industries

        DMC                                     Dubai Maritime City

       DMCA                                Dubai Maritime City Authority

       DTCM                     Department of Tourism and Commerce Marketing

       EMAC                             Emirates Maritime Arbitration Centre

        FTA                                 Federal Transport Authority

        GCC                                  Gulf Cooperation Council

        GDP                                   Gross Domestic Product

        HNWI                                 High Net Worth Individual

         ICT                         Information and Communication Technology

        KSA                                  Kingdom of Saudi Arabia

       MENA                                 Middle East and North Africa

        PPP                                  Purchasing Power Parity

        RTA                                Roads and Transport Authority

        UAE                                    United Arab Emirates

         UK                                       United Kingdom

        USA                                  United States of America

        VAT                                      Value-added Tax

©Frost & Sullivan 2018                                                             v
1. INTRODUCTION

    1.1 Aim and Objective of the study

To conduct a rapid market assessment on the marine / boat sector in GCC with a specific
focus on UAE with an ultimate view of providing the Italian Trade Commission with detailed
market information.
The Dubai Boat Show is expected to take place on the 27th and 28th of February 2018. The Italian
Trade Commission would like to understand the market opportunities that might exist for Italian
suppliers in the UAE market in particular and GCC market in general. The Commission intends to
use this information to showcase to its suppliers who would be taking part in the attending the Dubai
International Boat show that would be taking place between February 27 to March 3 at Dubai.

    1.2 Methodology and approach

The methodology and approach used in the study are as follows:
    •   Using in-house / proprietary knowledge of the GCC / UAE / Marine boat market

    •   To conduct research using secondary data and market information

    •   To conduct primary interviews with key stakeholders in the market to ascertain their views
        and gather inputs wherever feasible.

    1.3 Scope of the study

The scope of the study has been mainly focused on boat accessory manufacturers, service
providers, and boat builders as the companies provided by the Italian Trade commission were
mainly into the above-mentioned segments and wanted to understand the market opportunities of
those particular segments.

©Frost & Sullivan 2018                                                                          6
2. BOAT AND ITS COMPONENTS MARKET

    2.1 Overview of the Boat market in the GCC / UAE

The recent oil price collapse was seen as a wake-up
call for Gulf states to look beyond oil and to diversify
their economies. GCC economies are moving
towards non-oil sector development, which will
account for more than 80% of GDP in UAE and KSA.
From a regional perspective, the GCC will account
nearly 47% of MENA’s economy by 2025. KSA and
UAE are expected to be the dominant economies of
                   1
the region by 2025 .
The region has emerged as a major hub for leisure.
boating and is a thriving market for yachts and boats
This region accounts for 12% of the world’s
            2
superyachts , which denotes that the individuals in
the region have a high propensity to buy. The marine
infrastructure development and evolution of tourism
are expected to open up new opportunities in the
boat market. The major countries in the GCC boat market are Kuwait, Bahrain, UAE, Oman and
Qatar.

Kuwait
Kuwait’s abundant oil reserves contribute to more than 90% of the Government’s revenue. It is one
of the richest economies in the world and has used the revenues from oil to develop world-class
infrastructure, however only it has not been able to successfully diversify its economy like the other
GCC countries.
Kuwaitis have always been sea people and due to this there has been a high ratio of boat
ownership per person (1:44) greater than the well-developed North American and European boat
markets. The latest statistics reveal that there are approximately 15,000 leisure boats registered in
the country, which makes it the largest boat market in the GCC. There are 10 marinas that can hold
                                                                             3
approximately 2,000 boats, while the rest of the boats are stored in trailers .
The boat market in Kuwait is an import-dependent market, especially for small boats and yachts and
has networked with major boat builders in the Gulf, Europe, and the US. There is only a small
network of boat distributors catering to the boat market in the country. Gulf Master is the only

1
  Frost and Sullivan Analysis
2
  Dubai International Boat Show, 2018
3
  IBI Report, Frost and Sullivan Analysis

©Frost & Sullivan 2018                                                                           7
prominent boat builder catering to the market. It is also a large market for outboard motors and
Mercury engines has the highest share of approximately 60%.
The development of the Sabah Al Ahmad Sea City is expected to boost the boat market and create
new opportunities for players in the industry. The boating season in the country is between April and
September.

Oman
Oman’s economy is heavily dependent on oil resources, which has more than 50 percent, share of
the Government’s revenue. However, the fall in oil prices has resulted in Government’s efforts
towards diversification with the objective of reducing the contribution of oil to less than 10% by 2020.
One of the key focus areas of the Government’s diversification plan is the tourism sector, which is
expected to benefit the boat market.
The crystal-clear boating waters of Oman are a major attraction for boat enthusiasts. There are
                                                                       4
seven marinas that are operational and 2,500 leisure boats in Oman . Marina Bander Al Rowdha is
the largest marina facility in the country. It has both wet berths and dry storage facilities and also a
fully-equipped marine workshop.
The used boat market has high demand mainly from the expatriates who are on short-term
contracts. However, it is expected that development of new marinas will increase the demand for
boats. Sapphire Marine is the only boat builder in the country.

Bahrain
Bahrain is a small but well-developed country in the GCC with modern transport and ICT
infrastructure. However, the economy is largely dependent on oil resources. The country’s strong
maritime heritage and natural harbours available have made leisure boating popular.
Despite being an import dependent market, it acts as a centre of expertise by supplying equipment,
engines for commercial boats for the countries such as KSA and Iran. There are approximately
                                                                                                   5
10,000 leisure boats and seven marinas. Marina Club and Al Bandar Resort offer marina berths .
                                                                           6
Gulf Craft is the major player in the market with a 33% market share . Delma Marine is the main
boat and equipment dealer in the country, while Al Dhaen Craft is the major local boat builder. Al
Dhaen builds approximately 100 units per year and exports to markets in France and Thailand.
Marine property developments and Government’s push to become a major business and financial
centre in the GCC are expected to attract investments and bring in expatriates, which are expected
to indirectly benefit the boat market.

4
  IBI Report, Frost and Sullivan Analysis
5
  IBI Report, Frost and Sullivan Analysis
6
  Gulf Craft

©Frost & Sullivan 2018                                                                             8
Qatar
Qatar, the world’s richest country in terms of per capita GDP on a PPP basis is a fast-growing boat
market in the GCC. Doha is the main centre for all marine leisure activities. The boat market in
                                                                                            7
Qatar is an import-dependent market with 3,500 leisure boats and 5 full service marinas . Outboard
powered small boats form 90% of the total boat market in the country.
Qatar is developing marinas, coastline developments and also conducts the Qatar International
Boat show to promote the boat industry as a part of its efforts to diversify the economy.

United Arab Emirates
The UAE’s economy is one of the strongest economies in the GCC region supported by oil
revenues and moderate foreign policies. Per capita GDP of the UAE is on par with leading
European economies. The boat industry in the UAE was affected as a result of the recession, but is
gradually recovering post 2012.
The UAE also has a strong maritime heritage like the other GCC countries and is the second largest
boat market in the GCC after Kuwait. Dubai and Abu Dhabi are the main centres where marine
                                                                                                8
leisure activities take place. There are 20 marinas and 10,000 leisure boats in the UAE . Despite
having a large network of marinas, a majority of the boats are kept in trailers due to lack of berths
and high costs associated with owning berths. The Arabian Sea side boating waters near the
Emirate of Fujairah are well-suited for boating and are preferred.

                                                                        9
                              Coastline Property Development in Dubai

7
  IBI Report, Frost and Sullivan Analysis
8
  IBI Report, Frost and Sullivan Analysis
9
  Pixabay website

©Frost & Sullivan 2018                                                                              9
There are approximately 100 boat manufacturers in the UAE manufacturing more than 800 boats
           10
annually . The large number of boat manufacturers is mainly due to the fact that there are no boat
construction standards in the GCC. However, common standards are expected to be implemented
soon as a result of which the number is expected to reduce.
Majority of the boats under 40ft are outboard powered and are used for leisure fishing and cruising
by locals and expatriates. The Dubai International Boat show is a major event related to the boating
industry in the Middle East, Africa and Asian subcontinent.
           Despite political tensions and economic recession, the boat market in the GCC has
recovered and is expected to remain buoyant in the near future as a result of several coastline
developments and increasing demand for marine leisure from both the locals and expatriates.
Boat Market Structure and Key Stakeholder Types

      2.2 Boat Market Structure and Key Stakeholder Types

                        Figure 1: Structure of the Boat Market in the UAE, 2018

           Boat Builders         Engine Manufacturers           Boat Accessories and         Service Providers
                                                                 Marine Equipment
                                                                  Manufacturers
         Wood Boat builder         Outboard motors                                                Dealers
         Steel Boat builder         Inboard motors                                              Workshops
                                                                    Accessories
       Aluminium Boat builder         Stern Drive                                               Distributors
                                                                    Equipments
       Fiberglass Boat builder         Jet Drive                                                  Brokers
        Composite Material           Diesel Engine                                               Re-sellers
           Boat builder             Electric motors                                            Boat Rentals
                                                                                                  Marina

                                                      Source: International Council of Marine Industry Associations

10
     Gulf News

©Frost & Sullivan 2018                                                                                         10
2.3 Drivers and Restraints of the boat market in UAE over the past 3 years (2015 –
          2017)

Drivers

Dubai Industrial Strategy 2030 – Aims to develop Dubai as a global platform and destination
choice for international companies seeking growth and sustainability. Maritime is one of the six
target subsectors. The strategy will aim to capitalize on promising opportunities through the
localization of manufacturing capabilities in certain maritime sub-industries. It is expected that Dubai
will expand its activities related Boats and yachts manufacturing to meet the domestic demand.

Dubai Maritime Vision 2030 - Consolidate Dubai’s position as the foremost international maritime
centre based on its competitive potentials, especially in terms of modern infrastructures, strategic
location, customs facilities, and high-level services. One of the key goals of the plan is to encourage
Halal marine tourism in line with the ‘Dubai-Capital of the Islamic Economy’ initiative.

Dubai Maritime City (DMC) is a cluster dedicated to the maritime sector in Dubai that
supports the development of maritime industry in Dubai and the GCC. It is also the world’s first
dedicated free zone built for the maritime industry. The facilities include yacht manufacturing,
ship repair, marine engineering, technological expertise providers, office spaces and other
residential and leisure facilities for the marine community.

Maritime Dubai initiative - It provides an integrated platform that incorporates all elements
and components of Dubai’s maritime clustering, including ship owners, ports, docks, logistics,
arbitration, maritime classification, licensing, financing, maritime training, and maritime
policies. Additionally, the initiative facilitates coordination among government entities, national,
regional and international maritime organizations, and free zones.
Maritime Dubai also focuses on encouraging members to engage in new businesses through
trade promotion, attracting more foreign ship owners, operators and shippers to Dubai,
promoting the Emirate as a global centre for maritime training, facilitating communication
between all stakeholders and organizing international events to keep all stakeholders up-to-
date with the latest maritime developments and information.

©Frost & Sullivan 2018                                                                            11
Dubai Marina11

Dubai Canal opened in November 2016, is expected to increase the number of people using
marine transport services. It is essentially changing the landscape of boating in the UAE, by creating
a waterway in the centre of new communities, similar to other cities such as the beautiful waterways
adjoining the Sydney Harbour. Dubai Water Canal is expected to attract more than 30 million
                                            12
visitors per annum, according to the RTA . Two separate set of compliances are required to dock
here.

Dubai Harbour – Meraas Holding was launched by the Government due to high demand for
luxury yachts in the region and will have a new marina with 1,400 berths for yachts. It will also have
a cruise terminal built at an area of 150,000 sq.ft, that can handle 6,000 passengers. Underway is
the Dubai Harbour project which will be the region’s largest marina, and will provide more room for
the larger superyachts to moor, and even allow cruise ships to dock. Dubai Harbour will feature a
1,400-berth marina, increasing in one stroke Dubai’s capacity by 50 per cent from its current 3,000
                                                                                          13
berths. Owners of super yachts (up to 85 metres in length) will also be able to dock there .

Deira Islands – In 2017, Dubai developer Nakheel has awarded a construction contract worth
AED165m to build six marinas at its Deira Islands project. The marinas will accommodate a total of
614 boats and yachts up to 60 metres long. It is expected to be completed over a period of 2 years.

Waterfront development of residential properties is also expected to increase the demand for
private boats and yachts. Water homes are a considerable turnkey project for Dubai Properties. The
project is part of the firm's ambitions to introduce real estate innovation with centuries of ship
building heritage that will transform waterfront living in the Emirate.
11
   Pixabay Website
12
   RTA
13
   Dubai Government, WAM

©Frost & Sullivan 2018                                                                          12
The Roads and Transport Authority (RTA) recently opened more than 1,600 parking spots under
the Sheikh Zayed Road bridge in the Business Bay and Safa areas, allowing visitors to park their
                                14
car on either side of the Canal . This is to provide easy access for boat owners to their boats and
yachts. The RTA also announced the opening of nine marine stations on Dubai Water Canal, four at
Business Bay and five along the Dubai Canal. With the Dubai Creek, Business Bay and Dubai
Canal flowing into each other, linking Bur Dubai, Deira, Oud Metha, Zabeel, Karama, Satwa and
parts of Jumeirah and Al Safa to form an island, it is hoped that opting for marine transport is seen
as an ideal way to beat the traffic. This is expected to encourage boat owners and remove the
hassles of owning a boat in the Emirate.

Expo 2020 – Apart from the expected average of 20 million general visitors by 2020, EXPO 2020, a
                                                                                     15
six-month long event, alone is expected to bring in a crowd of 25 million visitors . Since the Expo
2020 announcement, there has been strong international interest in leisure craft in Dubai, as there
will be an increase in the number of leisure craft, fishing yachts, and tourism boats. Three factors will
put Dubai at the top of the global maritime industry: a rich tradition of boatbuilding, the latest
technology, and enhanced costs with access to manpower.

Cruise tourism in Dubai is promoted by the Dubai Tourism and Commerce Marketing (DTCM).
Tourist numbers are expected to rise to 1 million by 2020. Port Rashid caters mainly to demand
from the tourism sector. It can accommodate 7 large cruisers and transport 25,000 passengers
               16
simultaneously .

Restraints

Volatility in oil prices
The fall in oil prices have largely affected the GCC economies, which are largely dependent on
revenues from oil to finance the Government spending. The fall in prices have affected the
Government budgets, which has resulted in delays or stalling of infrastructure developments.
Several GCC Governments had announced development of new marina projects, however the
completion of these projects depend on the recovery of oil prices and growth in revenues from non-
oil sectors.

Qatar-Gulf crisis
This is expected to result in a marginal decline in Qatar’s GDP growth as the crisis will have a
negative impact on its economy. Qatar will see inflation, decline in volume of exports, increase
in borrowing costs and a fall in foreign investments.

14
   RTA
15
   EXPO 2020 Website
16
   DTCM Website

©Frost & Sullivan 2018                                                                             13
Global Economic Slowdown
There is a global economic slowdown, which has affected the spending of rich individuals around
the world. Russians were big spenders in the GCC, but post the oil price decline that led to a
downturn in the Russian economy; there is no spending from them in the GCC.

Need for Standard Regulations for manufacture of boats in the GCC
There are no standard boat manufacturing standards followed in the GCC or in the different
Emirates of the UAE, which has hampered the growth of the market.

VAT Implementation
The UAE and Saudi Arabia have implemented a VAT of 5%. This is expected to increase costs for
manufacture of boats, which are already high priced thereby affecting the demand in the region.

Challenges

High costs involved in boat/yacht maintenance
The costs involved in running large yachts can be daunting. A super yacht will require about 10 per
cent of its purchase price to keep it running for just one year. (Approximately AED 90 million for a
large yacht)

Lack of adequate berthing facilities across the GCC
Most of the GCC residents are sea people and invest on boats or yachts for leisure. However, there
are not adequate berthing facilities or marinas for the boats/yachts. Due to lack of facilities,
individuals hesitate to buy boats.
Increasing coastline property developments and marinas are expected to increase the demand for
boats/ yachts in the GCC/UAE.

Repair and Maintenance
There is a shortage of repair and maintenance facilities in the GCC/UAE and the services are poor
except for a few companies. Top luxury boats/ yachts require repair and servicing from top
professionals or companies that have an understanding of modern technology. Due to the shortage
of facilities and import dependence of the market, boat owners are expected to spend on importing
spare parts and services.

©Frost & Sullivan 2018                                                                           14
High Competition for the few limited orders
In the UAE alone, there are approximately 100 boat manufacturers of varying capacities and tiers.
However, the number of orders is low compared to the high competition, which results in low bidding
and reduction in profit margins which affects growth of the boat market in the long run.

3. MARKET DYNAMICS (MARKET SIZE ESTIMATES)
The global recreational boat market is expected to be worth approximately $23 Billion in 2018 and is
                                           17
expected to reach $28-30 Billion by 2022 . This is mainly due to growth in the emerging markets
such as South East Asia and the GCC.

The marine industry in the UAE is a well-developed industry and is expected to be worth
                                  18
approximately $66 Billion in 2018 . However, the recreational boat industry is expected to be worth
                                                               19
approximately $1.3-1.5 Billion (AED 4.8-5.5 Billion) in 2018 . It is an emerging market with high
spending power and is expected to provide significant opportunities for investors.

In 2016, the UAE imported Ships, Boats and floating structures worth $951.5 Million, while it only
exported for $447.5 Million, which mainly included re-exports to other GCC countries and other
                   20
parts of the world . The share of Italian companies’ exports to the UAE was only approximately
                                                         21                th
$51.5 Million, which was about 5.5% of the total imports . Italy was the 4 largest import market for
the UAE in the Ships, boats and floating structures segment.

The identified key component groups and their market share in the UAE boat market are as follows.

     Table 1: Market share/ Opportunity of the Component groups in the UAE/GCC Boat
                                           Market, 2018

                             Hull, Deck Keel, Rudder, Deck Hardware, Interior Fittings, etc. The share
     Building Materials      of the building materials component group in the boat market is expected
                             to be around 40% ($0.56 Billion or AED 2.08 Billion)

                             Technological advancements in the modern steering system have
                             increased the convenience of riding a boat for the boat owners and have
     Steering System
                             reduced the complications. It forms a share of around 4-5% ($0.07 Billion
                             or AED 0.26 Billion)

17
   Dubai International Boat Show Brochure 2018, Business Insider News Article, Frost and Sullivan
Analysis
18
   Gulf News Article
19
   Frost and Sullivan Analysis
20
   Comtrade
21
   Comtrade

©Frost & Sullivan 2018                                                                           15
Control systems, Monitoring systems, Navigation system, Communication
   Electronic System     system and Audio systems form an essential part of any luxury part as a
                         part of safety requirements. It forms a share of 12% ($0.17 Billion or AED
                         0.63 Billion)

   Powering System       It includes engines, transmission, shaft, propeller and forms a share of
                         9% ($0.13 Billion or AED 0.47 Billion)

                         Electrical fittings such as lighting, charging system, wiring, batteries,
       Electrical
                         navigation lights, etc. are expected to form a share of 3% ($0.04 Billion or
                         AED 0.16 Billion)

                         All paints both for interior and exterior purposes. It is used for both new
                         boats and maintenance of old boats. Coatings form a main part in the
       Coatings
                         periodical maintenance costs of the luxury boats and forms. It forms a
                         share of 10% in the boat market ($0.14 Billion or AED 0.52 Billion)

   Lifting, Handling,    Different types of limited berthing facilities both wet and dry and increased
  Transportation and     use of these by workshops and service centers gives it a market share of
   Storage Systems
                         4% ($0.06 Billion or AED 0.20 Billion)

                         After sales accessories and spare parts for the boats market has a share
     Accessories
                         of 2-3% ($0.03 Billion or AED 0.10 Billion)

                                                Source: Frost and Sullivan Analysis, Primary Interviews

©Frost & Sullivan 2018                                                                          16
4. SUPPLY CHAIN ANALYSIS

    4.1 Supply chain of the boat components market in the UAE

                   Figure 2: Supply Chain of the Boat Market in the UAE, 2018

                                                                 Source: Frost and Sullivan Analysis

In the UAE/ GCC, there are only a few marine equipment’s that are manufactured locally. The UAE/
GCC are largely an import-dependent market and almost 88% of the components are imported.
Most of the identified key component groups are imported from various countries such as the US,
France, Italy, Netherlands, Germany, etc.

Large boat builders directly import marine equipment from the manufacturers, while other boat
builders, shipyards, boat workshops, and boat owners import through designated dealers or
distributors.

©Frost & Sullivan 2018                                                                       17
4.2 Major Suppliers of boat components
The major suppliers or distributors in the UAE/GCC market are Exalto Emirates and Empire Marine
International.

Exalto Emirates Marine Equipment supplies approximately 80 international brands of marine
equipment and accessories.

                        Table 2: Exalto Emirates Company Profile, 2018

                             LED Lighting, Inflatable Boats, Audio Systems, Safety Equipment’s,
  Product Categories         Navigation Equipment’s, Pumps, Gauges and Sensors, Steering and
                             Control Systems, Seats, Trailer accessories and other accessories

                             USA, Netherlands, UK, Italy, New Zealand, France, Sweden, Australia,
  Countries of Import
                             Denmark, Germany, Norway, Japan, South Korea, Canada

                             Passerelle, Ladders, Cranes and Tender Launch System, Helm Seats,
                             Table Bases, Doors and Windows, Hydraulic Systems and Balcony,
                             Sunroofs, Gel-alcohol stoves, gas-cookers, Hob units, Ovens &
Imported Italian Products
                             dishwashers, Barbeques, sinks, Bow rollers, Hydraulic units, Flaps,
                             Outboard    brackets,   Bow   protect,   Pumps      and   blowers,   Chains,
                             desalination and reverse osmosis water purifiers.

                                                                                 Source: Company Website

Empire Marine International LLC supplies approximately 50 international brands of marine
equipment and accessories.

                        Table 3: Empire Marine Company Profile, 2018

                             LED Lighting, Inflatable Boats, Audio Systems, Safety Equipment’s,

  Product Categories         Navigation Equipment’s, Pumps, Gauges and Sensors, Steering and
                             Control Systems, Trailer accessories and other accessories

  Countries of Import        USA, Canada, Italy, Germany, Netherlands, Turkey, UK

                             The Italian companies that Empire Marine imports from are mainly into
Imported Italian Products    the manufacture of steering system, navigation equipment, audio system,
                             inflatable boats and deck building materials.

                                                                                 Source: Company Website

©Frost & Sullivan 2018                                                                              18
Other Major Marine Equipment Suppliers/ Distributors in the UAE/GCC

     1       D One Marine

     2       Brook Marine Equipment LLC

     3       Techno Marine Equipment Services LLC

     4       Ocean Waves

     5       Al Marmoom Marine

     6       Tile Marine LLC

         4.3 Identification of value for Italian suppliers in the GCC / UAE boat components
            market

Italy represents 10% of the global new recreational boats production and is the second largest
manufacturing country in the world after the United States (43%), followed by the UK (6.9%),
Netherlands (6.5%), Germany (6.4%), France (5.7%) and China (4.1%). Approximately 30% of the
turnover of the recreational boating industry in the Italy is from equipment or accessory
                  22
manufacturers .

The UAE has only around 12% of the marine components that are locally manufactured and
depends heavily on imports. In the UAE, Italian companies represent approximately 10% of supply
                       23
of boat components . There is scope for growth due to the high demand for leisure boats as a
result of the large number HNWI present in the region. Italian companies can establish distributors
or dealers in the region in order to supply to the UAE market. A big advantage in its favor is its
strategic geographical location where the UAE acts as a gateway for the other markets of the GCC,
Africa, and Asia.

The expertise of Italian companies in the production of boat components combined with innovations
in production technology are expected to place Italian companies at a competitive position and
present significant opportunities in the fast-growing UAE/GCC market.

22
     ICOMIA Boating Industry Statistics 2015
23
     Frost and Sullivan Analysis

©Frost & Sullivan 2018                                                                       19
4.4 Distribution channels for boat components market in UAE

The main distribution channels for boat components in the UAE market are as follows:

          Table 4: Distribution channels for boat components in the UAE, 2018

                         It includes individuals directly buying from the boat builders. They place
                         orders to the boat builders for a component. Boat builders provide sales
                         service to sell their products directly to the consumers in order to increase
     Direct Sellers      their profit margin and provide better customer services.
                         These companies are mainly into selling boats / yachts rather than boat
                         components or accessories. The share of these companies in the sale would
                         be approximately 25%.

                         Distributors are those companies that are not into boat building, but buy boat
                         components from marine equipment manufacturers either locally or from
    Distributors
                         other countries and sell it to the customers. The share of the distributors
                         would approximately be 70%.

                      Some of the foreign marine equipment manufacturers have setup their sales offices
                      in the region through which they cater to the various needs of the different customer
       Foreign
                      groups. However, due to cost implications this is not preferred by the majority of the
      Companies
                      manufacturers and has only a share of about 5%.

                                                                        Source: Frost and Sullivan Analysis

©Frost & Sullivan 2018                                                                              20
5. CUSTOMER ANALYSIS

       5.1 Market snapshot of the addressable opportunities across the identified 5 key
           components groups in the UAE boat market

As mentioned previously, boat manufacturers in the GCC import most of the components used
to build a boat. The main components are building materials and engines which are high on
the import list. Other key components groups that are of high interest for Italian suppliers are
as follows:

Table 5: Key Component Groups in the UAE/ GCC, 2018

      Key component groups of the UAE/GCC boat market

                          Building Materials
                          Powering System

                   Electrical and Electronic System                            Identified 5
                              Coatings                                             key
                          Steering System                                      component
       Lifting, Handling, Transportation & Storage System
                                                                                 groups
                            Accessories

                                                                  Source: Frost and Sullivan Analysis

       5.2 Overview of the customers for the various components groups

The boat industry in the GCC relies mainly on imported materials and components as they
count for 88% in the UAE, while locally-manufactured materials and components count for
             24
12% only          . Whether through designated distributors or directly from the supplier, boat
manufacturers will be the main customers for the various components in addition to
accessories. In the UAE, companies mostly manufacture customized boats and yachts, which
make them, acquire accessories from suppliers. Other key customers would be the various
workshops and service centres.

Following is a list of the top 5 customers in the UAE:

24
     Frost and Sullivan Analysis

©Frost & Sullivan 2018                                                                        21
Table 6: Top 5 Customers in the UAE, 2018

                      Gulf Craft is the major boat builder in the UAE/GCC and has a 25% market
                      share of the total boats in the GCC (there are approximately 50,000 boats in the
      Gulf Craft
                      GCC). It manufactures around 700 to 800 boats annually and exports more than
                      70% of the boats to around 80 countries. It also builds yachts, of which more
                      than 50% are exported.

                      It offers a wide range of products from small fishing boats, luxury yachts to
   Al Shaali
                      mega yachts. AS Marine also has a comprehensive dealer and service network
     Marine
                      throughout Europe, North America and Asia.

                      It is a recognized company for high quality fiber glass boats. Al Hareb Marine
  Al Hareb Marine     factory is located in Dubai and spans over 20,000 sq.ft indoor and 20,000 sq.ft
                      outdoor area.
                      It also provides electrical, mechanical, interior and exterior services to customers.

   Al Fajer Marine    It builds luxury yachts, commercial boats and fishing boats. It also provides repair,
                      maintenance and refurbishment on boats.

   Al Seer Marine     Al Seer Marine is a major boat builder in the UAE. It also offers yacht management,
                      repair and maintenance services to customers.

                                        Source: Company Websites, Dubai International Boat Show Website

6. CONCLUSION
The UAE/GCC is a thriving market for leisure boats and yachts driven by marine tourism, increasing
water-based sports activities and coastline property developments. The GCC region has the highest
share for the number of yachts owned globally, which is mainly due to the presence of large number
of HNWI. The GCC people are sea people, which are expected to boost Dubai’s position as a
global maritime hub and defy the regional economic slump.
Various development projects such as the Dubai Canal and Dubai Harbour are expected to place
Dubai in the spotlight of the global leisure boat industry. Gulf Craft is the major player in the region.
The identified key component groups for the Italian suppliers are electrical and electronic systems,
steering systems, lifting, handling, transportation and storage systems, Coatings and Accessories.
They exhibit large opportunities due to the fact that the UAE market is largely an import dependent
market and Italian companies can provide an edge over other country companies.

©Frost & Sullivan 2018                                                                               22
7. APPENDIX

    7.1      Interviews with boat manufacturers in the UAE

   Few interviews were conducted with boat manufacturers and components suppliers.
   There is no denial that the GCC, and UAE precisely, is growing to be a major player in the
   boating industry.
   More boat manufacturers are willing to enter the yacht manufacturing market in the next
   couple of years.
   The UAE market is the biggest boating market in the GCC and can also be the point of
   distribution to other GCC countries.
   Most of the components are not manufactured locally and therefore, there is always an
   opportunity for foreign manufacturers to compete in the UAE market as suppliers. UAE
   boat manufacturers are always looking for good quality products that they can rely on in
   order to produce high-quality boats and yachts and compete on an international level.
   Italian suppliers have built themselves a reputation of quality in the boating industry.
   However, they have some strong competitors from neighboring countries and the US.
   Their proximity to the region, compared to other major suppliers should be taken into
   consideration.
   The Dubai Boat Show is the perfect window to see how the industry is doing in the UAE/
   GCC. Many major manufacturers and stakeholders will be present.

       "Companies should aim to start
      exporting to other GCC countries                 "UAE is the biggest market in the
                through UAE"                                        GCC"

                                                       -Boat Manufacturing company Manager-
       -Boat Manufacturing company Business
              Development Manager-

©Frost & Sullivan 2018                                                                        23
7.2        Key Government Bodies

                             Table 7: Key Government Bodies, 2018

                         •    DMCA was formed in 2007 and is the regulatory authority for all coastal
   Dubai Maritime             maritime activities in Dubai.
    City Authority       •    Its main objective is to enhance Dubai's position in the maritime
       (DMCA)                 industry and monitor the development of maritime services,
                              management, vessel and yacht registration in the Emirate of Dubai.

                         •    EMAC's aim is to resolve shipping disputes through arbitration, a
    Emirates                  behind-closed-doors legal process that is typically cheaper and quicker
    Maritime                  than court action.
   Arbitration           •    This is expected to promote the industry both in the UAE and overseas
     Centre                   by forming a membership network of maritime professionals, staging
     (EMAC)                   seminars and other events to spread expertise, and raising regulatory
                              and other issues with government departments.

                         •    The RTA is responsible for planning, constructing, operating and
     Roads and                maintaining infrastructure for road and marine transport in Dubai as
      Transport               well as between Emirates and other neighboring countries.
   Authority (RTA)       •    It is also responsible for licensing and inspection of all kinds of road
                              transport vehicles.

  Federal Transport      •    The FTA is the federal authority that oversees development of the land
   Authority – Land           and marine transport in the UAE and is responsible for regulation of the
    and Maritime              sector.
          (FTA)          •    Its vision is to provide safe and world-class land and maritime transport
                              facilities for sustainable development.

                                                                         Source: RTA; DMCA; EMAC; RTA

©Frost & Sullivan 2018                                                                                   24
7.3      Laws and Regulations

                              Table 8: Laws and Regulations, 2018

                          •    The law is concerning the licensing of maritime vessels in the Emirate
                               of Dubai.
  Law no.11 of 2010       •    It aims to regulate licensing and inspection of maritime vessels in the
                               Emirate to ensure security, environmental protection and provision of
                               highest quality of passenger and goods transport services.

                          •    The law is aimed at integrating all aspects of maritime safety and
                               operational efficiency across local waters, in cooperation with the
    Resolution
                               parties concerned.
   No.2 of 2013
                          •    According to the law, marine craft driving licenses have been made
                               mandatory form January 2015.

                          •    The UAE has introduced a code for the UAE market and the
                               international market.
   New Yacht Code         •    Tasneef, the technical arm of the FTA has been authorized by the FTA
                               to implement the yacht code.

                          •    Dubai has banned all engineless recreational marine crafts, including
                               sailboats, kayaks and other small boats in Dubai's territorial waters
                               after sunset.
  Other Regulations
                          •    It is aimed at maintaining a high level of marine safety and ensuring a
                               safe environment for sea-goers and other users of recreational marine
                               crafts.

                                                                                    Source: FTA; DMCA
The UAE Government is expected to introduce more policies and regulations to position Dubai as a
global hub for the maritime industry.

Bibliography
    1. Frost and Sullivan Databases
    2. Government of Dubai portal
    3. Government of UAE portal
    4. Comtrade
    5. ICOMIA
    6. Department of Tourism and Commerce Marketing

©Frost & Sullivan 2018                                                                            25
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       ©Frost & Sullivan 2018                                                        26
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