Arson suspected in Sydney boats blaze

A blaze that destroyed two luxury boats worth $2 million at a Sydney wharf is believed to have been deliberately lit.

Two 40-foot vessels, a cruiser and a yacht, were destroyed in the fire at Woolloomooloo's Finger Wharf early on Saturday.

Detectives believe the blaze was deliberately lit and questioned a 24-year-old man several hours later.

The man, who was arrested over unrelated property offences at Woolloomooloo, was taken to Kings Cross Police Station and questioned but released without charge.

Detective Acting Inspector Michael O'Keefe confirmed the man was still in their sights.

"That person remains a person of interest in this investigation," he told reporters on Saturday.

What is left of the cruiser, which is believed to be owned by someone based interstate, and the yacht owned by a Sydney man is now at the bottom of the harbour.

They will be salvaged in coming days after police divers have had the chance to inspect what is left.

Up to 100 people were evacuated from surrounding accommodation after smoke from the blaze set off fire alarms.

Police managed to move surrounding boats at the wharf to prevent them also being destroyed.