Sales market suffers hangover from triple cocktail
Superyacht sales are experiencing a shift in the mid-size market.
It’s a potent cocktail and is making the superyacht sales market a touch dazed and confused.
The triple mixture of post-Covid party comedown, inflation and higher interest rates is beginning to hit hard in some quarters, with cautious buyers, price reductions and a flurry of boats back on the market the obvious symptoms.
News this week of encouraging inflation figures from the US and the UK may help soothe the condition but geopolitical issues such as the war in Ukraine and escalating conflict in the Middle East are not helping the mood.
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“We’re now dealing with the hangover of the party after Covid. People bought boats, bought sports cars, bought houses and supply and demand pushed up prices,” says Tim Langmead, a sales broker at Camper & Nicholsons.
“Reality has suddenly set in, certainly for the middle of the market in terms of semi-production rather than very large tonnage custom stuff – inflation has caught up with everybody, interest rates have risen and we’re seeing the pendulum start to swing.
“Below 60 metres we’re seeing a lot of boats coming back to the market and price reductions now that we haven’t seen since 2020.”
‘Definite shift’
It’s either owners having “overstretched”, or are worried about a “cooling off” in other markets around the world that affects spending power, or owners who are done with their “release-from-Covid-bucket-list-wish” of buying a superyacht, says Langmead.
He cites, by way of example, the number of 40m Benetti Oasis yachts which are now for sale. “You couldn’t buy them for love nor money for the past 24 months and now there’s lots on the market so there is a definite shift there,” says Langmead, with the caveat that Q4 is often busier than the summer.
READ: Cecil-Wright on ‘acceptance’ and the art of broking
Odyssey III, a classic Benetti motor yacht, is for sale with Camper & Nicholsons.
‘Opportunity’
Global unrest is adding to the uncertainty but isolating the yacht market from the fallout of world events is difficult, given the wider economic stresses which “make people nervous” about buying boats, according to Langmead.
“It affects everything, commodities, energy prices, the cost of living – these things have an impact, as does the negativity; it hits your confidence in buying boats, which are seen as a good lifestyle thing rather than a place to go and hide,” he says.
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Raphael Sauleau, CEO, IYC predicts widespread “price adjustments” in the coming months, but he adds: “It’s very dependable on what happens in the world going forward, there are a lot of uncertainties but as we like to say in our business, with uncertainties comes opportunities for our customer base.”
Jamie Edmiston, CEO, Edmiston, added: “Our expectation is the market will soften a bit. But having said that, if someone is selling a boat because they’ve decided they don’t want to have that financial liability then that is market movement and if you’re a broker that’s not necessarily a bad thing.”
Prices are being reduced in the sales market for yachts below 60m.
‘Stepped, not spiky’
Broker Chris Cecil-Wright of Cecil Wright & Partners admits he is no macroeconomist in terms of forecasting but thinks the impact will be temporary, even before the latest inflation figures came out suggesting price increases are easing.
“What I do know is historically in the yachting world is all I have ever seen is growth,” he says.
“I’ve seen it plateau from time to time but then I see growth again. It seems to be stepped rather than spiky. We’re in a period of relatively high inflation compared with recent history and it’s having a great impact on the yachting world.
“But I think it’s only a short-lived impact because rich people are still very rich, they just need to get their minds into a place where they spend their money.”
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High-water mark
With new-build prices up as much as 40% in some cases, because of the rise in the cost of raw materials, components and wages, as a result of inflation and war in Ukraine, buyers might be tempted to hang on or look towards the second-hand sales market for a good used boat.
But Cecil-Wright suspects this will be just the latest high-water mark for prices.
“The fact is we’re not going to see a reversal in superyacht build prices, so as an owner the sooner you get into your mind this is the price you’re going to have to pay for a new build the better,” he says.
READ: Why amped-up asking prices lead to ‘frustration’ and ‘stagnation’
“Second-hand prices compared with new builds, because of inflation, are looking very reasonable, and we’re doing quite a lot of deals at this very second based on those two criteria; one, shipyard prices might seem very high now, but they won’t seem high in 3-5 years when your boat comes out, because of ongoing inflation; and secondly, I only see second-hand prices going up for quality boats.
“One thing that is still happening is that there are many new rich people every single day.”
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