Market Intelligence - Look Back at 2012
The last few years have certainly been turbulent for the luxury yachting industry, but one of the positives to come from this is a greater degree of professionalism, with only the strongest companies surviving. Throughout this time, Camper & Nicholsons brokers have led the way. The size and technology of yachts continues to evolve, and as a company we have remained at the forefront of this development.
In the new-build market, shipyards saw just under 90 new orders during 2012. Camper & Nicholsons placed a significant number of these, including two of the largest. The new-build sector saw no significant change regarding order numbers compared to 2011, and, in light of recent years, this stability is reassuring. What has changed is the size of the large yachts on order With 15 yachts of over 100m (328’) currently in build, and a number of contracts signed for builds due to begin in 2013, the next few years will see some record-breaking deliveries from the likes of Oceanco, Lürssen, Fincantieri, Nobiskrug and Feadship (the latter of which signed a contract for its first 100m+ build in 2012).
A number of ground-breaking large yachts have been delivered over the last few years, including the 134m (440’) Serene, which was brokered by Camper & Nicholsons and delivered in 2011, but the number of deliveries per annum post-crisis have not been significant compared to what we will witness between 2013 and 2016.
There is still great competition between the yards as supply outweighs demand, even at the most successful yards. Reputation is key as clients are consistently choosing to build with those who have a well-proven track record. Many shipyards are still building yachts on spec, and although this reflects a reassuring confidence on behalf of the yards, the number of new builds listed for sale shows that many remain unsold on completion. This not only puts pressure on the already saturated second-hand market but also affects the new-build market. Clients who may have considered a new build might, instead, lean towards the deals to be had on new launches with no lead time.
Even the most optimistic of brokers would not claim that today’s second-hand yacht market is buoyant and, as such, those selling yachts continue to face a challenge. Early 2012 was steady in terms of sales, with the first quarter seeing the same number of yachts sold as the previous year’s first quarter, and the last quarter of 2012 seeing an increase in numbers, with a slight dip in the second and third quarters. Overall the brokerage market was down 11% in volume on the previous year and 25% in value terms. This was largely attributed to continuing uncertainties in the EU economy. However, the third quarter was also affected by the run-up to the US elections. Autumn is usually a peak sales period as it follows the summer season when owners have been enjoying their yachts and are looking to upgrade for the following summer. This year, the uncertain outcome of the US elections had a significant impact.
The market continues to welcome excellent vessels for sale almost daily, and remains oversupplied. But the Camper & Nicholsons brokers believe that buyers and sellers are finding more common ground and are more readily able to agree sales prices than has been the case over the last few years. Our advice to sellers is that if they want their boat to sell they have to price it competitively. A seller who selects a broker based on the promise of the highest price will not, in most cases, achieve a sale. Instead, their yacht will remain on the market for several years, costing them money and impacting on the yacht’s reputation as the price is forced down until it sells. When correctly priced, yachts are selling and it is down to the broker to advise wisely in the first instance.
Camper & Nicholsons brokers are fully aware of the market conditions and are realistic in their estimation of what sales price their clients’ yachts can achieve. For the large part, buyers have stopped talking about distress deals and bank repossessions; they are now looking for more sincere value-driven deals and assurance that the yacht they are buying has been well maintained.
It also seems that buyers are tired of waiting for the economy to stabilise. Many are deciding to take the plunge and buy if the seller has priced their yacht sensibly. The US appears to be primarily interested in smaller yachts at the 24-30m (78-100’) range and the market there has seen an increase in sales. The final quarter of 2012 showed more yachts were sold in the 24m+ size range compared to the same period in 2011. The European market is less predictable but brokers are reporting interest in the 30-40m (100-131’) size range, and this bodes well for 2013.
At Camper & Nicholsons, the year has got off to a positive start with enquiries coming in a lot earlier than expected. It is usually well into February before we get really busy, but this year we were dealing with a large number of offers and potential deals in January, which hopefully signals a successful spring.
From a forecasting point of view, however, it is nigh on impossible to work out which periods will be more productive in terms of sales. Could 2013 be the year for a gradual but significant upturn in the market overall? Only time will tell.
If there is an upturn, hopefully it will not be solely in terms of value but will also impact on the volume of yachts sold. There is a growing number of Asian HNWIs, although in terms of individual countries the US reigns supreme when it comes to centa-millionaires, and will do for some years to come. However, US clients do not tend to build the large yachts; these remain the preserve of Russian and Middle Eastern clients.
China remains a target market for the yacht industry, as does Latin America, Brazil and Indonesia. Latin American, in particular, is a promising new market as its citizens are culturally more inclined towards sun and yachting than the Chinese.
These emerging economies are fuelling the brokerage industry with optimism and this positive vibe is spilling into other sectors of our business, including charter, charter management, yacht management and crew recruitment.