Yachting market outlook
(EXTRAIT DE « THE STATE OF YACHTING 2019 » PAR SUPERYACHT TIMES)
Avant de nous tourner vers l'avenir, faisons le point sur la situation actuelle de l'industrie des superyachts. Il a fallu beaucoup de temps pour réorganiser la construction des superyachts suite aux difficultés rencontrées il y a dix ans. Aujourd'hui encore, on trouve partout dans le monde certains projets inachevés qui datent de cette période. En outre, à même période, de nombreux chantiers disparurent de l'industrie ou furent rachetés, ce qui entraîna une diminution du nombre général de chantiers en activité et une concentration de l’activité autour d'un certain nombre de grands chantiers spécifiques. Entre 2004 et 2008, 226 chantiers ont pu livrer 1 049 nouvelles constructions. Dix ans plus tard, entre 2014 et 2018, ce nombre a chuté à 170 chantiers pour 752 nouvelles constructions. La baisse du nombre de chantiers actifs se poursuit encore aujourd’hui. En effet, on enregistre 483 yachts pour 147 chantiers. Parmi ces 147 chantiers, les 25 premiers représentent 58 % du carnet de commande en nombre de yachts. En somme, l'industrie semble s'être concentrée davantage autour d'un plus petit nombre de grands constructeurs et a récemment connu quelques d'années de ventes fructueuses, en particulier en 2017 et 2018. Cela signifie-t-il pour autant que l'industrie peut envisager l'avenir avec confiance ?
Before looking forward, we have to take stock of where the superyacht industry currently stands. It has taken a long time to reorganise superyacht construction following the difficulties experienced ten years ago and, even now, some unfinished projects from that period can be found around the world. In addition, during this period many yards disappeared from the industry or were taken over, resulting in fewer yards in operation and a concentration of business around a number of large yards. Between 2004 and 2008, 226 yards delivered 1,049 new builds. Ten years later, between 2014 and 2018, this number had dropped to 170 yards delivering 752 new builds. The decline in the number of active yards continues today in the construction book of 483 yachts, which is now divided between 147 yards. Of these 147 yards, the top 25 account for 58% of the construction book in the number of yachts. So, the industry appears to have become more concentrated around a smaller number of larger builders and has recently enjoyed a number of years with good sales, particularly in 2017 and 2018. However, does this mean that the industry can look to the future with confidence?
The construction book is at its highest level since 2011, when many “boom time” projects were still under construction. We see shipyards accustomed to starting construction of yachts on speculation selling quite a few of their projects to customers before construction is started. Could this be a sign of a tightening market? Yacht brokers certainly seem to echo that sentiment, as they scour the market for the few good new builds and used yachts still available, or try to persuade owners of good yachts to sell their boats. A number of builders have also taken note of the changing market and are moving up in size, producing their first models over 40 metres. Several recent first-time buyers are known to have bought large (50-metre plus) to very large (80-metre plus) yachts right away, also supporting the trend towards larger yachts.
The move by several builders towards larger-sized yachts could be explained by the fact that many well-reputed large yacht builders now have full order books. Customers who want to move up in size but do not want to wait for many years for a fully bespoke yacht will gradually get more newbuilds to choose from. It is somewhat telling that a builder like Amels, which offers a number of yachts over 50 metres built on speculation, has been selling very well lately. In addition, the yard has recently updated and stretched almost all of its yacht models by several metres.
The move towards more explorer-like yachts seems set to continue, as especially at the smaller end of the market we see many builders building yachts with explorer-like characteristics. We use the word “explorer-like” as many of these yachts do not tick all of the boxes traditionally associated with explorer yachts. In addition, the discussion about what constitutes a true explorer yacht is still ongoing and will probably not die down anytime soon. Yacht owners are becoming more and more curious about cruising in new areas off the beaten track and need a different type of yacht in order to do that.
At 194 yachts, sales of new superyachts in 2018 were at their highest level since the extreme peak of 241 yachts in 2008. However, several challenges lie on the horizon in terms of regulations, sustainability and economic circumstances.
Looking at sailing yachts, the market is becoming more diverse in terms of new builds. Builders formerly dependent on the 30 to 60-metre segment have all had to take a close look at their strategy going forward, as sales in that segment have been low for several years now (around 10% of new yacht sales, whereas sailing yachts are currently 16% of the operating fleet). Some yards are diversifying their product mix by getting into motor yachts, while others are gearing up for bigger projects over 60 metres. In that segment, however, the traditional sailing yacht builders will also meet large motor yacht builders getting into sailing yachts and coming in with a fresh approach to the market. Nobiskrug and Oceanco are best known for this, but there are also other well-reputed large yacht builders who are known to have been working on designs for very large sailing yachts.
Economic factors still remain the major concern. The spectre of trade wars is looming above the US and Chinese economies, while many European economies are expected to experience a slowdown in economic growth in 2019. The economic growth of superyacht powerhouse Italy almost came to a standstill in the early months of 2019 and this could potentially negatively impact the financial stability of superyacht builders in that country, as many mid-sized Italian banks are already in dire straits and will have to cut back lending. This comes at a point in time where quite a few Italian shipyards are still recovering after years of hardship.
We cannot write this outlook without mentioning the word Brexit. The United Kingdom, a major hub for the superyacht industry, is facing uncertain times due to Brexit. The country hosts a number of successful yacht builders like Princess and Sunseeker, renowned refit yards and a large quantity of equipment, brokerage, insurance and design companies among others, but most importantly, a high number of very wealthy people from all over the globe call London their home. What will all these companies and people do if the UK does indeed plunge into a no-deal Brexit? The uncertainty around Brexit has already made many major companies across multiple industries set up shop elsewhere in the remaining EU countries.
These days, Asian countries are a key source for the growth in the worldwide number of ultra high net worth individuals, but superyacht ownership is not yet as widespread among them as it is among the wealthiest in the USA or European countries. At the same time, Asian yacht buyers are becoming a more prominent group every year. They now account for over 7% of the known owners of 40-metre plus yachts in the construction book and, as also indicated in our analysis of market trends earlier on, we believe the share of Asian ownership in the world superyacht fleet will continue to grow.
RUSSIA & NORTH AMERICA
Russian customers have been key to the huge growth of the superyacht industry since 2000, and they are still valued customers, particularly in the higher end of the market. 11% of the sold superyachts in build over 40 metres are destined for Russian owners. However, North American customers have been the driving force in the market in recent years and their role remains key, with a share of 17% of sold superyachts in build. A lot will hinge on the continued appetite of North Americans for superyachts going forward.
Superyacht builders also notice that their customers are getting younger and some of these young customers are buying very large superyachts. Meanwhile, the global superyacht fleet has been growing by 150 to 180 yachts per year in recent years. At 483 yachts, the current construction book guarantees close to another three years of deliveries and more speculation projects, in particular, will be started up in the intervening time. The market for refitting and maintaining yachts is also buoyant, with yards in that industry gearing up to receive the rising number of very large superyachts.
We predict around 160 to 180 deliveries per year during 2019 and 2020. For the picture after 2020, a lot will depend on the level of new yacht sales during 2019. If the market can sustain the level of demand experienced over the last two years for another year, then deliveries in 2021 and 2022 can also be expected to remain at a high level. However, the growing economic uncertainty after a number of very good years presents a significant downside risk. An economic downturn seems likely, as we are approaching the end of an economic cycle. Superyacht builders are currently very busy and working hard to satisfy their hungry customers. However, going forward they will need to be even more flexible and show that they can go along with new demands from their changing clientele in order to remain successful.
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