LIFE AT A GALLOP
superyacht market is also offering discounts of its own. Asking prices for some pre-owned superyachts have been slashed since the end of the show season. When paired with the steady decline in sales activity from the highs of 2021, is this the beginning of the end for the superyacht sales boom?
There have been some sizeable discounts post-show season. Ocean Independence dropped the price of the 68m (223ft) Abeking & Rasmussen superyacht, Soaring(pictured), by €10m ($10.5m) to €88m ($92m). Burgess also reduced the price of an 82m (269ft) Devonport yacht, Sarafsa, by €10m to an asking price of €65m.
Superyacht Investor asked Rory Jackson, head of Superyachts, VesselsValue whether these were one-off reductions or signs of a discount trend.
“When sales are low, price reductions increase, which is in line with what one would expect to see,” he says. “In 2021, for instance, sales were extremely high and therefore there was less need for price reductions or modifications."
“Unlike sales, price reductions are not linear in their application. Meaning, from month-to-month price reductions peak and trough regularly and quite severely, making the exploration of trends more challenging,” says Jackson. VesselsValue tracks three-month rolling averages. Its data shows that sales are down on 2021 levels, with price cuts happening more frequently.
Alex Clarke, broker, Superyacht Division, Denison Yachts, says the change in prices is consistent with the type of seasonal reductions he has seen in the past. “Here's kind of what always happens in the winter. You have a lot of people rushing to close by the end of the year to take advantage of that bonus depreciation,” he says. Sales also tend to slow down in the winter when brokers and buyers typically tend to take leave.
Clarke says prices will continue to drop until the beginning of the European summer season. “This is why you see prices go down now, with sellers wanting to draw attention to their yacht before the year’s out.”
Kevin Merrigan, chairman, Northrop & Johnson, tells SYI that whilst the busiest time of year is traditionally between spring and autumn, December figures may change things.
“With American buyers taking advantage of accelerated depreciation, December has also become a very busy time of year,” he says. “There is slightly more flexibility in pricing than a year ago. However, as always, well-maintained yachts, in the right location, and priced appropriately, are selling quickly.”
Clarke agrees, adding that some yachts from shipyards with orders going into 2024 and 2025 tend to be in more demand and typically do not need a reduction in the asking price.
“You bring a late model from, let’s say, Princess or Azimut or Sunseeker, Ocean Alexander or Numarine to market, these will sell relatively quickly because you don’t have to wait two-and-a-half years for a new build,” says Clarke.
Merrigan also highlights that all makes are susceptible to changes in economic climate. “One of the prestigious Dutch shipyards used to claim their yachts never sold for less than they cost to build, until 2008,” he says. “Monumental financial crisis aside, well-built and designed yachts, regardless of where they were born, traditionally hold their value well.” Like any asset class, strong brand names will always be more likely to sell.
Location plays a key factor in price reductions too. “If the vessel isn’t in Florida or the South of France, it is a lot harder to sell. They are your typical shop windows,”says Will Christie, CEO and founder, Christie Yachts. “I know of two vessels in Hong Kong that have been available for a while and haven’t sold, but if they were located on the French Riviera, they would likely sell in a matter of weeks.”
Recent sales have also been boosted by the strength of the dollar to the euro. When inventory in the US began to dry up, US buyers then looked to Europe.
“I had a client buy a late model Benetti that we bought in France and shipped over to the US,” says Clarke. “He took advantage of the dollar/euro rate and got an excellent deal, which a few years ago would have cost him a couple more million dollars.”
Looking at the bigger picture and the slowdown of sales throughout 2021 shown on the graph, some may wonder if we are beginning to see the end of the sales boom.
“This may signal the first real signs of the tide turning, but I definitely wouldn’t say this is a seismic shift,” says Christie. “Demand may be weakening a bit, but the drop in prices is more likely down to the fact that sellers originally listed premium asking prices.”
Clarke of Denison also says that he has seen a slowdown. Because the boom saw so much of the market inventory sold the limited inventory is still driving the sales high as there is more competition with fewer boats on the market.
“There are more buyers with less inventory. That alone is causing sales to be consistently strong,” he says.
There is little evidence for a downturn, agrees Northrop and Johnson’s Merrigan. Some of the price reductions can be attributed to careful cost accounting.
Investors are buying yachts as “investment charter platforms” and, after adding financing costs to the equations, are becoming more cautious about finalising sales, he says.
Jackson, from VesselsValue, also thinks predictions that the superyacht boom is about to turn into a bust are premature. Average prices are still above where they were before the 2021 boom.
“As yet, it is not clear whether demand for secondhand superyachts is declining or there simply is not enough high-quality inventory in the market,” he says. “However, given that new build shipyards are still reporting high levels of activity and plenty of active buyers exist, it seems likely that the latter is truer than the former.”
While memories of 2008 are still fresh, with shipyards full, available inventory scarce and demand remaining high, there is no reason to assume that the recent price drops are evidence of a dramatic decline – yet.
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