Maritime Observer Newsletter #6
Welcome to the June 2024 edition of Leisure & Legal, The Maritime Observer’s newsletter chronicling the Middle East marine leisure industry, and the legal developments of the global fleet.
In the past few years, Egypt has been slowly planting the seeds into transforming itself to become a key player among the many emerging superyacht markets of the region. In this month’s feature, I dive into the country’s efforts and potential in attracting the attention of the international yachting community, how the country’s rich history could be a strong selling point, and the turbelence of navigating the vagaries of geopolitcal issues surrouding the Red Sea.
Elsewhere, a quick roundup of this week’s news continues to find new movement around the UAE and Saudi Arabia, as both countires continue to establish themselves as major destinations.
Wishing you a fantastic July,
Faisal
Sale of seized yacht AMADEA blocked by US. Court
The US government, in possession of the seized luxury motor yacht AMADEA, was denied its request to obtain the right to sell the yacht by a New York court. Amadea, belonging to sanctioned Russian oligarch Suleyman Kerimov, was seized as it was docked in Fiji in May 2022, following the U.S. sanctions imposed on Russia. Delivering his judgment, Judge Dale Ho. contended that relying on the insurmountable maintenance costs should not act as the sole cause of wishing to sell the yacht, saying “The court is wary of relying solely on maintenance costs to justify sale when those costs represent a small fraction of the value of the res and do not appear to be atypical for the property of this type”
Jeddah Yacht Club and Marina launches membership club
Known as Saudi Arabia’s first west coast marina, Jeddah Yacht Club & Marina has grown into an exclusive destination. The marina opened its doors in March 2022 and is officially recognized as an entry point to the Kingdom of Saudi Arabia. In June 2024, the Jeddah Yacht Club was officially launched, offering exclusive perks for its members. The private membership includes a cigar lounge, beach club, fitness center, spa, Marina Social by Michelin Star Chef Jason Atherton, and the exclusive Riva Privé Lounge, alongside a private concierge and allocated berthing spots.
D-Marin announces new marine; Port De La Mer
Marina chain D-Marin announces a new addition to its roster of world-class marinas. Port De Le Mer Marina is set for a September 2024 launch and will be located on the coast of La Mer’s north peninsula. Port De La Mer marks D-Marin’s fifth marina in the UAE.
Al Seer Marina appoints Gunther Alvarado as new Deputy Chief Executive Officer
Marine equipment and supplies company Al Seer Marine has appointed Gunther Alvarado as new Deputy Chief Executive Officer. Spending over 10 years with the company, Alvarado assumed a variety of roles, starting as a Technical Manager, moving to the Head of Yacht Management and Operations and Chief Operating Officer thereafter. According to a press release issued by Al Seer Marine, in his new position, Alvarado will focus on company growth through his knowledge and expertise.
Suez Canal Authority announce reduction of transit fees
The Suez Canal Authority (SCA) introduced a new 50% reduction of transit fees for any vessel under 300 tons passing the canal. The scheme will run from July 1st - October 1st and aligns with the upcoming Egypt International Boat Show, taking from July 11-14 on Egypt’s north coast at Marassi Bay Marina.
West Nautical Open First Office in the UAE
Occasioned by the growth of Dubai’s superyacht sector, Superyacht specialist service company West Nautical opened its first office in the UAE, in Dubai’s Business Bay. West Nautical offers complete superyacht services, ranging from sales, crew, management, and charter. The UK-based company also holds an office in Limassol, Cyprus.
Reimagining the Suez: Inside Egypt’s Path to Establishing The Next Yachting Destination
It was in 1869 when the 145.75-meter Egyptian yacht El Mahrousa became the first ship to pass the Suez Canal, the waterway connecting the Mediterranean Sea and the Red Sea. 150 years later in 2015, the same presidential yacht inaugurated the new Suez Canal extension, an upgrade that dramatically improved the transit of luxury vessels by offering two-way travel from the Mediterranean to the Indian Ocean, Southeast Asia, and beyond. Now, with Egypt becoming an emerging superyacht destination of its own, the Suez Canal is no longer just a transit route, it is now a gateway inviting superyachts to extend their peregrinations into Egypt's offerings.
The Red Sea, long inaccessible to superyachts, started to welcome the idea of superyacht tourism in the last five years. In Saudi Arabia, with the city of Jeddah launching its yacht club and marina, the government launching the Saudi Arabia Red Sea Authority to regulate coastal tourism, and the investment in luxury resorts and megaprojects NEOM, The Red Sea Project and Amaala, Saudi Arabia is transforming the country into becoming the ne plus ultra of luxury cruising. On the other side of the Red Sea, however, Egypt is going all in on establishing a yachting hub of its own by utilizing its unique history, and strategic location, while modernizing regulation and investing in infrastructure to appeal to the international yachting community.
Plans for reimagining the Suez Canal started in 2021, when a national regime, supported by President Abdel Fattah El-Sissi and the government of Egypt, was implemented to provide more for luxury vessels passing by. “We want to change the image that the Suez Canal is supposed to be for cargo or tankers.” says Bahi Naguib, Managing Partner at Felix Maritime Agency, “There is another dimension we want to highlight, which is that we could provide luxurious services too.” There is an appetite for wanting to visit Egypt as well, market research showed. “People are interested in coming to Egypt, they just don’t know how” Naguib adds. To achieve this, Egypt has invested in improving the efficiency of the ports, including Port Said, Port Ismailia, and Port Tawfiq, while interspersing world-class marinas within them to accommodate foreign vessels of all sizes to initiate connectivity and access to exploring the Red Sea.
Infratructure
The first of these projects is the Ismailia Yacht Marina, ushering in a new era for the Suez Canal and its tourism prospects when completed in September 2023. Placed midway along the canal, between Port Said and Suez, a strategically chosen position that would facilitate smoother cruising journeys for yachts visiting the Red Sea, the marina accommodates 65 berths and includes services from boat repair and refit to security and supplication of safety equipment. Ismailia is Egypt’s first “green” marina, as part of the Egyptian government's plans to reduce the country’s carbon emissions and promote renewable energy sources. Going beyond the canal, however, there is an opportunity to dedicate more to the facilities needed. Attracting larger yachts requires investing in commensurate infrastructure and cruising behaviors in the rest of the country's nautical venues. “The strategy to deliver the needed facilities needs to incorporate their requirements and how long they stay, but it also needs to be balanced against the impact of the environment,” says Jeff Houlgrave, Senior Associate at Marina Projects. “It is unlikely that the superyachts coming through the canal or even on the north coast are likely to stay very long. These are transient boats that need specific services.” One pragmatic way to deliver these services, Houlgrave posits, is through moorings. “Fixed moorings, already being developed in the Mediterranean and areas of sensitivity, seem to be the way to deliver facilities for these yachts to stay safely without damaging the environment.” Although officials are cognizant of the need to deliver on the right facilities, they are also aware of having a marina development strategy that starts by focusing on small boats first. “Anywhere in the world where the yachting community has flourished, it has flourished via sailing and small boats first”. says Naguib. That is not to say Egypt is not more than well-equipped to handle large visitors today. Hurghada Marina, a prominent marina on the Red Sea Coast, operates at a 240-berth capacity for yachts up to 100 meters in length while providing an array of superyacht services. While other established marinas interspersed throughout Egypt are equipped to cater to boats in the 70-80 meters LOA segment, such as Marassi Marina and Porto Marina, both located on Egypt’s North Coast.
Regulation
To facilitate smoother cruising, under the aegis of the Egyptian Government, with the counsel of a yachting committee, Egypt unveiled a fusillade of new regulations affording owners longer permits, flexibility, and convenience as part of a strategy to attract foreign flags. In July 2023, Egypt's Ministry of Foreign Affairs announced a new decision, yet to come into effect, to grant any foreign-flagged yacht a three-month visa, extending time from the previous one-month residency. In addition, a new decree was promulgated, permitting vessels to depart Egypt from any tourist port or marina of their choosing, a move seen as a significant upgrade. “Yachts were required to depart from their first port of entry, limiting itinerary flexibility.” says Mahmoud El Kady, Managing Partner at BWA Yachting Egypt. “Yachts can now depart from any port or marina, offering greater freedom and route planning.” BWA opened its first Middle East office in Egypt in 2022, allowing clients of the international agency to benefit from local experts who understand the nuances of Egypt’s nautical sphere while providing the appurtenances of cruising. Unified fees and a unified online portal have too been in the works, allowing foreign vessels to apply for and receive visas within 30 minutes with ease and transparency. The introduction of eased regulations now clears the way for the country to promote its major attraction point, Egypt’s cultural heritage.
Curating New Experiences
To establish itself as a new cruising destination, Egypt is utilizing its most crucial asset to stand out - a rich culture strong enough to attract visitors on its merit. A cradle of civilization, Egypt contains no shortage of onshore tourist attractions, a ubiquity its officials are aware of. “What makes us unique is the cultural heritage that we have'', says Naguib, who expounds on the cross-selling strategy between Felix and Sailing Tours, the agency’s tourism component, used as a synergy to offer superyachts a fully immersed experience.
Indeed, curating bespoke experiences is of paramount importance to the next generation of superyacht owners, a new generation with behaviors stretching beyond the ambits of traditional superyacht owners In 2021, Fraser reported that the average of superyacht owners has dropped by 10%, while other factors, such as the onset of the 2020 global pandemic, created a “boom”, changing the priorities and needs of yachts, and galvanizing owners to spend more time in their floating homes than ever before. “There was a need to escape and see something new”, according to IYC CEO Raphael Sauleau. In an insight report focusing on ultra-high network individuals (UNHWIs) published by luxury-lifestyle magazine Robb Report and The International University of Monaco, one of the four key themes of the next generation shed light on the shift in the interpretation of “luxury” in today’s world, with there now being a move towards more experiential living. “From a client’s viewpoint, the industry transcends its naval routes and aligns more closely with the holiday and tourism sector”, says Dr. Phil Khalus and Dr. Annalisa Tarquini-Poli. For Egypt, showcasing these touristic opportunities has never come at a better time when appealing to the superyacht sector, considering the need for experience has never been more prevalent. Onshore attractions, from the Pyramids of Giza and the newly opened Grand Egyptian Museum to exploring the Red Sea's unspoiled coral reefs are an edge that stretches beyond hospitality. Now, with all the developments by the country, a challenge lies in security issues surrounding the Red Sea.
Security Concerns and Future
The Red Sea, long marred by the threat of piracy permeating maritime activity, faced a challenge in creating any destination appeal, adding an asterisk in streamlining operations to open up the region to the global fleet.
This led to security concerns for any vessels visiting the area, either passing through or stationary. Issues persisted up until January 2023, where after a decade of “high-risk” categorization, this designation was removed following a low incidence of piracy attacks. This designation, however, proved to be short-lived after the re-emergence of Houthi attacks in late 2023, causing severe disruption to cargo vessels passing through the waterway, and forcing them to divert into other routes instead. Last month, the revenue of the Suez Canal was announced to have a 64.3% decline compared to the year prior, and right behind the shipping sector, issues cascaded into the superyacht industry, rendering it difficult to secure any coverage for any foreign flag wishing to cruise the area from an insurance standpoint. “The situation, at a high level, is that the market is not very keen on anything to do with the Red Sea at the moment,” says Mike Wimbrige, Managing Director at Pantaenius UK. Meanwhile, as the southern area of the region faces challenges, other areas, such as Abu Tig, a prominent area situated south of the Suez, are casualties of a perception issue despite being far away from any conflict. And in an effort to encourage more activity, The Suez Canal Authority introduced a new 50% reduction of transit fees for any vessel under 300 tons, running from July until the end of October.
Moreover, while the apprehension felt by owners in traversing the Red Sea is in large part due to the current political conflict, it is only one factor converging with a number of multivariate geopolitical issues impacting the superyacht sector, among them the sanctioning of Russian-owned yachts following the 2022 Russian invasion of Ukraine, and the 2024 US Presidential elections. “If you take the Russian ownership away, and the American ownership away, that's an awful lot of people that are probably disinclined to travel anyway whether it was easy or not. I think it says less about the region but more about the political state those two owner groups are in”, Wimbrige adds. Therefore recent world events postulate that American and Russian owners, who occupy 23.6% and 7.8% of yacht ownership by nationality respectively, according to The SuperYacht Times State of Yachting report, are reluctant to travel irrespective of the attacks.
Despite the uncertainty of the situation, officials are hopeful to see the Canal’s activity returning to its usual traffic, with a focus on the long-term vision of the Red Sea tourist prospects. “While recent events raised concerns, we are confident that Egyptian authorities are taking proactive measures to ensure a stable environment.” El Kady says, a declaration buttressed by government efforts, commitment to security measures, and a proven track record of safe cruising. “Egypt invests heavily in maritime security to deter and prevent incidents reaching level 1 in security.”
The vicissitudes of world events are not stopping Egypt from leveraging what its 1,500 km coastline has to offer. “Now is the time to start to develop the infrastructure on a planned basis. Once that’s clear, it will be clear for the customers and the yachts” says Houlgrave. And Egypt is making it as clear as their crystal waters. Events such as the Egypt International Boat Show, taking place on Egypt’s North Coast from July 11-14, along with other plans underway, including the waterfront development Tawila Island, a new yachting venture that will give yachts a place to anchor, Egypt is on a clear path to give yacht owners a reason to stop by and become the quintessential destination.