Hong Kong's Luxury Boating Industry Faces a Parking Crisis
The booming demand for luxury yachts in Asia’s financial capital Hong Kong, largely fueled by wealthy mainland buyers, is pushing the rental price of marina berths located across the city’s coastline up to record levels.
International yacht makers have seen a significant increase in demand from Chinese business tycoons, who have been purchasing and parking their floating mansions in Hong Kong due to the lack of marina infrastructure, ship maintenance facilities and high import tax rates for yachts in the mainland.
“What’s happening to the property market is happening to the boating market on a smaller scale,” said Baggy Sartape of yacht broker Asia Boating, referring to a 50 percent increase in Hong Kong property prices over 2009 and 2010. According to Sartape, the city’s eight marinas have been running at near full capacity over the last year, despite the exorbitant costs to park a yacht.
Berthing fees for a 50 foot yacht could cost its owner around HKD 17,000 ($2,189) a month, equivalent to the rental price of a studio apartment in the city's central district. Berth rental costs have doubled or in some cases even tripled over the last 2-3 years.
While berth rentals have shot up significantly, prospective yacht owners aren’t being deterred. Carleton Poon, service leader at the Aberdeen Marina Club says there is a long waiting list for a spot at the prestigious marina, “People have been on the waiting list since 2007”.
When the Clear Water Bay Golf & Country Club was asked about the availability of berths at its marina, a representative from the club told CNBC the waiting list was completely full and restricted to members only.
This may be positive for the city’s recreational clubs but Hong Kong’s overcrowded marinas are becoming a large frustration for yacht builders and brokers who believe the market has much more room to grow.
Before the global financial crisis, Mike Simpson, managing director of Simpson Marine said Hong Kong made up 65 percent of the brokerage’s Asia business, however the lack of parking space has shrunk that share down to 10 to 15 percent.
According to the Hong Kong Marine Industry Association, there are currently 6,700 registered leisure craft in the city, of which approximately 1,500 are parked in berths with walk on access. The rest are anchored using swing moorings, in which boats are attached to a buoy and swing around in the water according to the direction of the tide. To get to the yacht however boat owners need to use a small craft like a dinghy.
“It’s been enormously frustrating turning down customers... some customers will never get a berth until a new marina is built,” adds Bart J. Kimman, managing director of Northrop and Johnson, another yacht broker, noting that he too has been unsuccessful in locating a berth for his own personal use.
Both Simpson and Kimman are lobbying the government to build more marinas, but progress has been limited.
”A reason given to me by a person high up in the government, who in fact owns a yacht, (is that) Hong Kong doesn’t want to be seen favoring the rich as it would not make a good headline,” said Simpson.
“It’s very political here in Hong Kong, the land and marine government departments aren’t set up to communicate easily with each other,” added Kimman. According to him, there are many ways to get around the lack of space in the city. “How easy it is to reclaim land?…It’s not very difficult.”
However this sentiment isn’t shared by the Hong Kong Marine Department. “The rental price of berths is justified by the demand,” said the department’s spokesperson, Philip Wong, adding that typhoon shelters provide a sufficient alternative. Such shelters allow boats to be moored in small coves protected by a breakwater.
Without a concrete plan in place to address the lack of berthing space, yacht makers say Hong Kong is losing out on a lot of business to neighboring China, which is aggressively developing marina infrastructure across its coastline, as well as Singapore.
Leisure yachts, most often attached to wealthy people, bring in a substantial amount of business into a country, including the purchase of fuel, food and maintenance services not to forget thousands of dollars in discretionary spending.
As a result, numerous members of the yacht industry told CNBC, Hong Kong is missing a “huge golden opportunity” to develop into the Monaco of the East.