The Yacht Club de Monaco’s “La Belle Classe Superyachts” in conjunction with Only Yacht recently united more than 45 professionals from the luxury yachting industry to discuss the current state and future of yachting.
Below is an edited summary of the article published by the Yacht Club de Monaco/La Belle Classe Superyachts.
Is the yachting sector suffering from a crisis?
The consensus is that problems tied to the financial and economic crisis are still hampering the yachting sector and influencing prices. BNP Paribas’ Olivier Blanchet reported that on the brokerage market, between 2011 and 2012, prices dropped by an average of 30 percent, while inventory of second-hand yachts increased, particularly in the 79 to 115-foot (24 to 35 meter) segment. “Demand for funds to finance yachts remains steady, although more than two-third of acquisitions are still made without a request for funding,” Blanchet said.
The crisis has, however, revealed a surprisingly healthy mega-yacht sector, with yachts 262 feet (80 meters) and up leading the way. “New builds just got bigger and bigger in 2011 and 2012. Some 25 to 30 boats of 329 feet (100 meters) are already sailing. A few projects for over 525 feet (160 meters) are in the process of being built,” Blanched added.
One of the primary reasons for the yachting sector to fare better than others is that the population of Ultra-High Net Worth Individuals is still growing. Worldwide, there are an estimated 82,000 people with a combined fortune exceeding 50 million euro. Among them are an estimated 1,226 billionaires (480 billionaires in the United States and 147 billionaires in China). A remarkable 20 percent of the top 100 billionaires are under the age of 50, and indeed, yacht owners are getting younger. On average, owners are 10 to 15 years younger than two decades ago.
Expectations have also changed. Today’s yacht owners often have to meet the needs of extended families and children, and feel a duty to protect the marine world with more eco-friendly yachts. These enthusiastic owners are also better informed, and buying a yacht is a more carefully thought-out project.
Most agree the market has adjusted to a new reality. “The market has changed… We will have to resize and reformulate our companies,” said ITM shipyard’s Marc Ovanessian. Boatyards doing refits also report that owners are spending less and controlling costs more.
The industry still relies (too much) on traditional markets
According to Fraser Yachts CEO Hein Velema, the charter market is improving. American customers (who are helped by a recovering economy and the dollar’s exchange rate) are returning to Europe (up 10 percent compared to 2011), followed by Russian and Brazilian clients. “Today we face political instability in Russia, which encourages potential clients to remain discreet, although there is strong interest from a young Russian clientele,”said Sergei Dobroserdov, director of brokerage and yacht management firm Nakhimov.
However, given the problems encountered by European clients, it is imperative to look at other markets. “I am convinced it is in a crisis that man finds his creativity and solutions. It is up to us, to you, to keep the New Small Yachting World alive,” said Fraser Yachts Monaco founder Antoine Althaus, who is contemplating retirement after a career that began in 1968.
Is China working towards a patient conquest?
The Chinese appear to want to learn about the yachting lifestyle. However, the yachting industry needs to take into account the country’s ancestral culture, which differs in many ways from that of the West. The Chinese government currently uphold restrictive legislation on yacht imports (rules restrict imports to boats less than a year old an tariffs are high—43.6-percent), and have numerous rules constraining navigation. However, this is changing slowly.
Luca Boldrini is the sales director at CRN, part of the Ferretti Group. The company’s main shareholder is the Weichai Group, a large Chinese industrial company, and working closely with the company has given Boldrini some insight. “I can tell you they are working to learn and teach China the ‘Life Style’,”he said, expressing optimism for growth in the medium to long term.
Although many professionals will attend the next Hainan RendezVous (March 30 to April 2), a luxury showcase held on a resort island in Southern China, many recognize they will have to be patient before actually selling yachts in Asia.
Looking beyond Asia, some, like Marcello Maggi, president and co-founder of the Ancona-based ISA shipyard, are relying on emerging South American markets whose yachting culture is already well established.
The conclusion of the panel was that to move forward and face exterior regulatory challenges, the yachting industry has to have a more unified voice.
For more information, visit yacht-club-monaco.mc/en/