Should You Buy a Marina Berth?

Figures show that boat ownership is growing by approximately 3% per annum. Although the majority are buying small, trailerable boats there is still a significant increase in the number of larger boats on our waterways.

This puts an ever increasing pressure on where to moor these craft. It has long been a problem in heavily populated areas like Sydney but is now becoming a problem in all popular boating areas.

This is making it harder to find somewhere to keep your boat. Many marinas in popular areas are full and have waiting lists. Although new marinas are being built and theoretically there is room to build more, it seems likely that demand will eventually outstrip supply.

Modern environmental concerns, objections from nearby residents and restrictions in onshore space for facilities like parking make it difficult to build new marinas in many high demand areas. Even expanding existing facilities can be difficult if space for onshore facilities isn’t available.

Adding to this problem are the increasing costs of on water boat storage. Renting a marina berth in Sydney for a 40 foot boat can cost around $16,000 per annum and in a popular regional area around $8,000. According to a rough calculation based on my own experiences this represents an annual increase of around 7% per annum in the last seven years compared with an annual inflation rate of 3% over the same period. So it seems safe to say demand is putting some pressure on berth rental costs.

In some areas and particularly with new marina developments it’s possible to buy a marina berth in the form of a long term lease of between 10 and 30 years. In this instance you pay up front for the lease period and there are ongoing costs levied for maintenance and staffing of the marina infrastructure. A few years ago this was a very attractive option. The cost of a lease plus the ongoing costs was cheaper than renting over the same period without even considering inflation.

Based on my own observations there has been an increase in the cost of a lease in some areas of over 250% during the last seven years. In some ways this makes this option less financially attractive as you have to have a large amount of money available upfront and the total cost benefit as opposed to renting for the same period has significantly diminished.

On the positive side the berth is yours for the lease period and you can rent it out if you are not using it. If the cost of marina berth leases keeps going up you should be able to sell the lease on at a profit depending on how long the lease has left to run.

The situation can only get worse cost wise as the number of boats increases faster than places to keep them. This is making it a significant factor when deciding on buying a boat.