Kai Malmivaara

Interview – Meet the Team | Kai Malmivaara, GMBA – Middle East

You are a lawyer by profession but now mainly work in the Marina sector. How were you introduced to the sector, and what excited you about it?

Actually, my first position after graduating from the university was a lawyer in one of the biggest shipping companies in Finland, which managed a fleet of over 30 different types of vessels, from large passenger ferries to all types of cargo vessels. That was a good introduction to the Marine world, which I have always found to be a fascinating sector. I have been a boater for most of my life, and I got my first boat in early 70’s. I think boating is close to the hart of most Finns, as we have thousands of lakes and a beautiful archipelago between Finland and Sweden. Before joining Marinetek, I had been involved with a couple of large scale marina projects, providing a basic understanding of the industry related challenges.

What was the most interesting position you have ever held? What made the job so interesting?

I have been lucky as all my positions, across varying sectors, have been extremely interesting and rewarding. In addition to shipping, I have worked in oil exploration and production, in financial services and asset management, in consulting and executive search, in real estate business and now in the marina sector. It is difficult to pick only one but, if pressed, it would be my position as Managing Director of Marinetek Middle East and Asia. In this position I have had to learn how to work in an extremely international environment, with strong Middle Eastern bias. We have build and grown the business from scratch to an operation covering most of GCC countries. People do not usually understand the challenges relating to building on water compared to building something on land. Structures on water are on constant movement 24/7 and 365 days in a year, with design life for more than 50 years. This requires special engineering skills and knowledge, which makes this business both demanding but also rewarding.

How long have you been based in Dubai? And what made you move to the Middle East?

I moved to Dubai in 2005, when the building boom here had just started. I have seen the Palm and the World Islands literally built in front of my eyes, aswell as the tallest buildings in the world. I came to Dubai for the first time in the early 80’s when I was working in the oil business, and found the place to be fascinating, full of different cultures and in many ways very exotic. Naturally Dubai was then very different to what it is now as it has become one of the metropolises of the world in a very short period. The weather here is very nice and sunny for most of the year, and Dubai is one of the safest cities in the world. The level of services here is outstanding. However, I spend all summers in Finland, when the weather here is very hot, and in that respect, I can enjoy the best sides of both UAE and Finland.

Dubai and the entire Arab region are embracing yachting with multiple projects on the go at the moment. There are marina developments in Jeddah, Dubai, Qatar. What are your predictions for yachting in the Arab region in the next 30 years?

After a few quieter years many of the waterfront project are seeing daylight here again. In the UAE most of the projects are in Abu Dhabi, where many of its surrounding islands are being developed, and several new marinas are planned. There are many projects ongoing or in the planning phase in Saudi Arabia, especially in the Red Sea, such as Neom, Jeddah Central, the Red Sea and Amaala Triple Bay Projects, to name a few. These projects are built both for locals but also for tourists. Clearly, they want to attract visitors from around the world to experience the Red Sea and its beautiful reefs. The target is to entice the Mega- and Superyachts, spending most of the summer season in the Mediterranean Sea, to come to the Red Sea during the winter. From there they can travel through the Gulf to Dubai, Abu Dhabi and Qatar, and all the way to Maldives and even Thailand. This project is called “The Spice Route”. Qatar has experienced a boom in construction relating to the FIFA World Cup, to be hosted November – December 2022. A few new marinas have been built to cater for the needs of the visitors that will come with their yachts to watch the games.

My belief is that yachting is going to be grow in the Middle East once the new marinas and related facilities are ready to receive their guests in the coming years.

And what are the biggest challenges facing yachting in the region?

There are still some obstacles relating to yachting especially in the KSA and Dubai. For example, financing has not been available for boat buyers, which naturally affects the number of boats that will be bought in the region. However, changes are imminent, and in future the banks can give financing for boat byers. There are some historical bureaucratic matters to be addressed, for example: getting sailing permits before going out with the boat; getting visas for the visiting crew members of the yachts; alcohol permits, etc. The weather in summer is not ideal for boating but in the winter season it is great. There may also be some political risks, like the vicinity of the waters of Iran in the Arabian Gulf, and the military actions in Yemen on Gulf of Aden added with some acts of pirates from the African side countries. However, the situation seems to be contained at present.

We work in a very global sector and Covid 19 again highlighted the interconnectedness and dependency of global trade. What do you think are the lingering challenges from Covid 19 for the sector? And what is the silver lining?

Most of the restrictions relating to Covid 19 have now been withdrawn in the GCC countries. The situation has normalised with tourists and visitors welcomed again. The only thing that will be checked is their vaccination certificate.

There is an increased demand for boats which, coupled with the shortages of components for the boats, has lead to long waiting times for new boats. Although a temporary situation, it does affects boating. Sales are dropping from last year’s peak, as was expected.

As for the silver lining, we saw an increase in the number of new boat owners, thus increasing the size of the boating community, which is good for the industry in general. The challenge is to keep these new boaters within the community!

Kai Malmivaara, GMBA Middle East
Tel: +971 50 276 0287
Email: kai.malmivaara@gmba.blue

Disclaimer: Global Marine Business Advisors is a registered legal entity and is a network of independent marine industry advisors. In all articles the opinions expressed are those of the author and does not necessarily reflect those of GMBA.

Letter From the United Arab Emirates | Kai Malmivaara, GMBA-Middle East

It may come as a surprise to many that the size of UAE boat park is not very big. There are only about 15,000 boats in the UAE, and only about thousand of them are 45 feet or longer. And yes, a large number of mega yachts are owned by UAE and GCC nationals, but only few of those are actually in the Gulf as most of them are in the Mediterranean Sea.

Most typical boats have center consoles and outboard engines and used mainly for fishing. Boats up to 12 meters are the most popular, as a driving license for these boats is fairly easy to obtain. There are not many sailing boats in the UAE, due to lack of suitable wind and skill required for sailing. Generally, the average age of the boats is relatively old, from 2009 or older.

There are certain matters that may affect to the general interest for boating, such as the annual registration requirement, sailing permits being required from the coast guard every time one wants to go out and a lack of suitable destinations, particularly in Dubai. Financing is not available for imported boats, although local manufacturers may offer payment plans. Therefore, only a few expatriates have the financial resources to buy a boat, and there is always uncertainty of how long they will stay in the UAE.

However there are presently 42 marinas in the UAE, having in total about 7,100 berths. Dubai has 17 marinas with 3,750 berths and 640 dry berths, and in Abu Dhabi there are also 17 marinas with 2,480 berths and 415 dry berths. In the other Emirates Ras Al Khaimah has 4 marinas with 540 berths, Fujairah 2 marinas with 180 berths, Umm Al Quwain one marina with 110 berths, and Ajman one marina with 50 berths. The average occupancy of the marinas in the UAE is only 73%. In Abu Dhabi the occupancy rate is 81%, in Dubai 65% and in the other Emirates about 60%. Despite this oversupply of marinas, there are still about 14 new marinas in the UAE under construction or waiting for commissioning, totaling 1,145 berths.

Motivation for building the marinas has in many cases been real estate driven, instead of meeting the demand. Marinas have been built to increase the value of the land and houses around them, wherefore at least in the beginning, when the area round the marina is still under construction, the occupancy of the marinas is quite low. Also, many of the boats are kept on trailers or parked in private residences, and thus do not need berthing.

When it comes to sales of new and used boats, the situation in the UAE is much the same as in the rest of the world. Due to the Covid-19 pandemic, interest for boating has substantially increased and there are no inventories of new or used boats. Order books of the local boat manufacturers are full and delivery times are getting longer due to current global supply chain issues. Local dealers of international brands are struggling to get their share of production from the manufacturers, and the quantities do not meet the demand. The average price range of new boats is between € 250,000 – € 350,000 but in real terms the number of new boats sold in the UAE is still fairly small, about 100 annually, which is not much compared to the oversupply of the berths so this boat/berth ratio will most probably continue for some time.

This autumn and coming year are going to be very active times for leisure marine business in the UAE and in particular in Dubai. The Abu Dhabi Boat Show is held between 13. – 16.10. which is the first local boat show since the break of Covid-19 pandemic. ICOMIA World Marinas Conference is taking place in Dubai 12.-14.10. Also, the Expo 2020 Dubai started in the beginning of October and is going to last till the end of March 2022. UAE seems to be opening now and is welcoming tourists from all over the world.

Finally, after several years in planning, the marine trade association, Leisure Marine Association, Middle East North Africa (LMA MENA), has just recently been founded from within marine industry to promote, protect and advance interests of its members in leisure marine industry as whole. It will bring together all stakeholders within UAE and MENA with united voice and to affect positive change to the industry.

All this is expected to give a welcome boost to the leisure marine industry in the UAE which hopefully will continue also for some time in the future.

Kai Malmivaara, GMBA-Middle East
+971 50 276 0287
kai.malmivaara@gmba.blue

Disclaimer: Global Marine Business Advisors and its associated website www.gmba.blue are not registered legal entities. GMBA is a network of independent marine industry advisors. In all articles the opinions expressed are those of the author and does not necessarily reflect those of GMBA

Electric Sailing Revolution | Kai Malmivaara, GMBA-Middle East

The electric sailing revolution is coming – and though adoption in the marine sector is proving much slower than in the automotive world ashore, progress is being made. However, one has to admit that the market is still relatively small but growing.

Today electric systems are offered at a quite competitive price. When we add to that the fact the electric system is almost service free, the total cost of ownership is turning in favour of electric.

The system takes up less space than the standard diesel, is much quieter and vibration- and emissions-free. A key part of the viability of electric propulsion rests on the notion that a smaller motor can achieve the same work as a bigger diesel. There are two elements to this. First, a diesel engine is not an efficient converter of chemical energy into thrust, creating a lot of heat and noise in the process. Second, the torque characteristics of electric are much better than diesel.

A diesel engine develops optimum torque between 1,800-2,000rpm, while electric motors deliver it from 0 to around 2,000rpm. This allows electric motors to use higher efficiency propellers that are slimmer and more steeply pitched.

The system also allows running all sorts of comforts on board that would normally require a generator: from hot water on-demand to coffee makers and freezers. This system is able to supplant generators on almost all boats that currently have, or would like to have, a generator.

From a design standpoint, electric propulsion is more in-line with a sailboat’s form functions, enhancing both the sailing and motoring experience. Quicker access to power, concise control and comfort all lead to higher user enjoyment, more frequent use of the vessel and ultimately market growth for sailing as a whole.

The helm’s ability to start and stop the vessel is much smoother and easier with electric motors’ constant torque. Switching direction without a gearbox or its associated lag, the constant high torque and fine-tuned control lever all contribute to making vessel navigation in tight places and docking far easier. Also, because the system doesn’t need to idle or be ‘started’ propulsion is much easier to access when needed and can be used strategically to make day-sailing and cruising much easier and more enjoyable.

With greatly improved handling performance, the switch to electric propulsion is justified as a value proposition. If a vessel is easier to handle, stress goes down and enjoyment goes up. Something as simple as docking anxiety can ruin an experience and turn off users from sailing. A vessel that is smooth, powerful and reliable will be more attractive to be used and enjoyed, ultimately more than justifying the initial cost.

The best value can be realized when designing vessels, and identifying existing vessels, where sailing and hull performance will optimize electric propulsion and the ability to regenerate while under sail. The complete system will combine with solar and/or wind inputs to allow for completely self-sustaining vessels while underway or moored.

Because of the highly reduced complexity of motors, breakdowns are far less frequent. Maintenance is a tiny fraction, therefore delivering much lower cost of ownership than a traditional engine driven system. Especially for fleet vessels and charter vessels, electric propulsion makes them more profitable to operate and decreases out-of-service periods for maintenance and repair.

In a commercial application the value is realizing return on investment, or for the private user who values reliability and robustness, the value is also clear. Here is yet another point where the switch to electric propulsion can completely justify the cost.

Another advantage is in how service and support can be much quicker and more comprehensive. Because everything is talking together and integrated through the remote service interface almost every possible issue can be seen through diagnostic software and services. Anywhere in the world where the vessel can get online, service technicians can log into the system and diagnose and repair issues remotely. Upgrades and refinements will simply be remotely installed because many of the design and performance improvements will be through software improvements.

Electric propulsion allows for much greater freedom in boat design. If the design’s form function is weight reduction, an electric propulsion system can be much lighter and fulfil all the propulsion needs. Electric propulsion allows for many more systems to be supported by less weight and tech space. It also enables the required components to exist in much smaller spaces, allowing for more livable space and greater capability on smaller vessels.

It also allows very capable vessels to be either smaller or faster. In both cases the cost of ownership is highly reduced. Smaller vessels with owner-operators can be overall more capable, much easier to use docking, sailing and while at anchor. Faster vessels can weigh less while prioritizing speed over range and other luxuries but still have much more capacity to the users. Vessels that go largely unused by operators now will be more appealing as electric due to ease of use, reduced stress through breakdown and ultimately the reward of being able to sail well enough to be energy self-sufficient.

Sailing is one of the great leisure activities and electric auxiliary propulsion brings forward a new era. Vessels can now be emission free after production with incredibly long product half-lives and highly reduced cost of ownership.