Demand set to surge for opulence of life on the ocean waves
Hong Kong marinas turn the tide on forecasts of a flight of capital to predict
SOME sceptics would have us think there is going to be a flight of capital from Hong Kong as life under the Special Administrative Region looms.
However, if the bullishness of the territory's yacht and marina industry is anything to go by, we could see the reverse.
Instead of setting sail for pastures new, Hong Kong yacht and marina companies and clubs are preparing for a flood in demand from free-spending wealthy mainlanders, returning overseas Chinese and locals as the territory continues to prosper.
'Most people are expecting to see an exodus from Hong Kong in 1997, but quite the opposite is happening with an influx of returning Chinese who are used to a Western-style of leisure who want to own a boat and buy club membership here,' Neil Brooke, manager of the Gold Coast Marina, said.
The number of Hong Kong registered pleasure craft has already risen by 2,167 to 9,447 in the last five years, according to the Marine Department.
Demand has been mainly for smaller craft, but the number of luxury vessels over 100 feet rose fourfold in the same period to 1995.
Most of the big spending for larger yachts in the next few years is expected to come from China's nouveaux riches.
Piers Rance, project and business development manager for Industrial Development Holdings, which owns Hong Kong Marina, said: 'We have done our homework and see rising demand for boats of 65 to 100 feet coming mostly from mainland Chinese boat owners, while the ex-pats tend to go for the 40 to 55 feet yachts.' Berths are still available in just about every marina in Hong Kong for small to medium sized yachts, but there are already waiting lists of up to two years for bigger yachts.
To cater for this shift in demand, Hong Kong Marina in Hebe Haven is being redeveloped to house some of the larger vessels and Mr Rance says he expects to fill all 350 berths within two years. All the berths for yachts below 60 feet have already been bagged.
The redevelopment is expected to be completed in September.
The chairmen of many of Hong Kong's blue-chip companies, like Sun Hung Kai Properties, have either luxury yachts or power cruisers for their pleasure.
It is difficult to pinpoint how many luxury yachts are owned by individuals or corporations, as most are bought through off-shore companies for tax purposes.
Also, while able to write off some of the cost against tax as a business asset, few corporations want shareholders to see the cost of a yacht on the balance sheet.
To own your own custom-made luxury motor yacht, you will need anywhere between $115 million and $230 million, although there is no real upper limit.
'It is very easy to blow a lot of money on a super-yacht,' Brian Macaky, Discovery Bay Marina manager, said.
Tastes vary, but opulence and size tend to be common requirements in the luxury end of the market. Interior fittings are often made of solid marble, heavy wood and expensive fabrics.
Master bedrooms are commonly larger than the average Hong Kong flat, some as large as 750 sq ft, with en suite his and hers bathrooms.
Features can include top-deck jacuzzis, elevators, walk-in freezers, guest rooms and cabins for a crew of 10 or more.
Mike Simpson, managing director of Simpson Marine, a highly reputed agency for millionaires and dignitaries, said some customers insist on cabins for bodyguards.
Socialite playboy and shipping heir Cecil Chao's 105 ft Happy Sea Lodge yacht, moored in Discovery Bay marina, even sports a helicopter pad.
While Mr Chao has been happy to flaunt his boat, most owners prefer a low profile.
'Company chairmen are often in a catch-22 situation, caught between gaining a tax advantage and attracting attention to a luxury which top executives might not want employees to see,' Jeremy Comport, of high-speed boats specialist Seanergy, said.
For busy executives who like to stay in contact while at sea, there is growing range of state-of-the-art satellite communications to keep in touch with financial markets.
Added to the initial cost of buying a yacht are annual running costs, which can average 10 per cent of the value of the boat. For instance, a yacht that costs $77 million, can cost an additional $7 million a year in fuel, harbour fees, crew salaries, maintenance and refits.
Full-time crew may be required to sail in advance to a holiday destination or business meeting.
The most advanced communications equipment available for leisure boats uses inmarsat technology, which provides access via the Global Positioning System to national and international communications networks, including fax and e-mail.
A voice-activated system that works much like a telephone costs about US$20,000, but for accessing data only, the price drops to about $6,000.
Yachting enthusiast Peter Churchouse, managing director of Morgan Stanely Asia, who privately owns a 54 ft custom built yacht, was one of the first Hong Kong users of such technology.
'It has been invaluable, especially in places like the Philippines and Thailand where there is limited telecommunications outside of the capital cities,' Mr Churchouse said.
'But at US$4.50 per minute it is not cheap.'