6 brokers on headwinds facing the industry
The superyacht industry is used to weathering storms and even came out of the pandemic with increased forward momentum. But there are always headwinds on the horizon which could hamper progress and induce anxiety in some quarters.
Away from macroeconomics and the geopolitical issues that could affect the globe, we asked six brokers about the likely headwinds or talking points coming the way of the superyacht world.
Here are their top-line thoughts:
“One of the biggest challenges is that as we keep creating these amazing yachts and platforms, where are we going to maintain them? There is only so much capacity for maintenance only so many yards they can go to for a refit.
“Recently, we’ve seen boat-building yards also starting to refit yachts, for example Oceanco yachts going to Lurssen for a refit or vice versa, so that should tell us something.
“The season in the Mediterranean is getting longer – Turkey can be really attractive in November – so the maintenance periods are shrinking to be ready for next summer and there is going to be a queue, so that will be a commercial challenge.
“At the lower end of the market, where there are a lot of 20m+ boats being churned out, where are they going to kept, moored, maintained? It’s exciting because there are commercial opportunities for shipyards and suppliers, but it’s also quite a worry. What are we going to do with all these boats?
“As far as sustainability is concerned, we’re in a holding pattern at the moment where we really aren’t sure what we need to do or what we can do. At some point in time, the classification and the flag states will start to help us understand. We’ve all woken up to it and we’re all trying to do our own bit but everybody is working in silos at the moment and there is not one central focus.”
“I have long been predicting that the market for production GRP yachts will continue to soften and quite aggressively. Buyers for such yachts tend to spend a larger proportion of their net wealth on such a purchase and are therefore more significantly impacted by the cost of borrowing going up. Many of them will have previously financed a yacht purchase. Similarly, owners of boats are seeing their cost of capital across their lives increase, so more will be looking to sell. It’s a classic case of supply and demand. With production yacht manufacturers having popped so many GRP boats out of moulds over the last few years, there is a lot of inventory out there.
“A handful of desperate sellers can set a new lower level for the market, so my advice for sellers, especially in this kind of market, is that your first vaguely sensible buyer is 99.9% going to be your best buyer. You may think you can hold out for more, but you will ultimately be holding out for less. Sensible pricing from the outset and a carefully coordinated sales strategy will be vital.
“In the words of a respected industry colleague, ‘It will be a very good time to be a good broker, and a very bad time to be a bad one.’ I don’t feel concerned, but rather more excited about the prospects that this kind of market throws up for us as a business. In a bull market where buyers are chasing the market, anyone can succeed. Now those brokers that add, genuine, quantifiable value will thrive.”
“Refit facilities are never going to be happier that there are more and more yachts and not enough refit yards so that’s a growing market.
“There are probably too many brokers in the current market. To be a broker these days you just need to print some business cards and you’re a broker, and there are a lot of people creating a lot of noise in the industry. But that doesn’t give you the gravitas to close those big deals. There are some really good people coming out of the bigger companies starting smaller businesses and I think there’s a lot of room for those.
“Personally, I don’t see a rosy future for the really big businesses because the cost base of running a brokerage is much smaller than it ever was. My marketing costs for a boat are the same as Burgess or Fraser or Camper & Nicholsons but it costs me a lot less to run my business.
“If ever we get into a war I’m always going to win because I can afford to win, they have to rely on gargantuan scale to justify huge commissions.”
“The environment and sustainability is something everybody has on their agenda. We’ve seen owners with new-build yachts taking this sustainability challenge more seriously and they’re prepared to invest money in developing new technology and collaborating with the yards, engineers and brokers to try to ensure these boats they’re building are at a far higher level of environmental performance.
“That’s been a big change and I think as the age profile of owners has come down, people are more willing to say, ’OK, I’ll spend the money, not because it makes economic sense but because it’s the important thing to do.’
“I’m sure the resale value plays a part in it but we’ve been fortunate in this industry to see some serious people put money behind innovation into the yacht business.
“Not all yacht owners think like this. Some genuinely do care and some care less, it’s a perception and a point of view. But more are thinking about sustainability than they used to.”
Geoff Moore, MD, West Nautical
“The sustainability question is snowballing, such as how yachting can be perceived as greener, or at least not as black and grey as it is seen by the mainstream media. There is the question mark over eco vandalism – the people who spray paint yachts – and how that will impact yachting. Sustainability is a personal thing, some people drive Teslas, some drive V12s. Different people have different mentalities, but some owners, their families and certain crew members in the industry are very hot on sustainability and it’s building momentum like in the rest of the world.
“There are two other major crisis points in yachting: There is not enough marina space to cater for all the yachts out there and being built, certainly in the Mediterranean; And we don’t have the numbers of competent crew to come in and learn in the industry and move up the ranks. It’s almost a reverse pyramid, there are more captains than deckhands and we need it the other way around.”
Tim Langmead, broker, Camper & Nicholsons
“We’re cautiously optimistic, we wouldn’t get this job done if we worried about headwinds too much. You’ve got to be blindly optimistic that people will want to use the boats and go travelling with friends and families.
“There will be slowdowns in deliveries because shipyards have oversold in the last 24 months. There will be labour issues, delays in engines, generators and components so that’s going to take a lot of people’s time and frustrate a lot of people in the middle of the market.
“As new boats are delivered there will be more competition for marina spaces. It might seem like a side bar but it’s a practical side of owning a yacht.
“In terms of qualified crew there’s always a headwind to find decent people because they have such an impact on the owner’s enjoyment of a yacht. The crew have to get along with them, get along with the family, they need to be honest and straightforward and experienced and have fun, underlining that this is supposed to be fun.”
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