The booming market for yachts of all sizes has led to price rises and delivery delays not seen since before the 2008 Global Financial Crisis. Sam Tucker, head of superyachts for VesselsValue, asks: Will the boom last?
| 14 January 2022
It’s no secret that business is booming in the yacht industry. However, most builders complain of supply-chain issues and shipping delays as they try to meet unprecedented demand. What the future holds for superyacht prices in 2022 depends on factors driving prices today.
There is normally seasonality in the second-hand dealmaking market for superyachts: a rise in transactions in May, ahead of the summer charter season in the Mediterranean, followed by a cooling-off period in September. In 2020, that spring rise was completely flattened, followed by a higher than normal level of deals in the last six months of 2020. As a result, 2021 saw brokerage sales reach unprecedented numbers – each month set records for sales concluded in their respective month.
Our data shows approximately 30 per cent of the world’s superyacht fleet is for sale at any moment. In 2021, we saw that number depressed as buyers snapped up yachts. The 500 superyacht sales in 2020 were up from 429 in 2019. By the end of November, 2021 we had already counted 873 superyacht sales, with up to 950 expected by the year’s end.
We also observed a seasonality in internet searching for yachts, either for sale or charter and charter searches are much stronger than those for sales, indicating that a booming charter market may also be behind many new yacht sales, as buyers that include resorts and individuals looking to ‘buy-to-let’ enter the market.
Superyacht deliveries will inevitably pick up in 2022 and 2023, as the massive order book generated in 2021 results in plenty of new supply
Given the constraints on superyacht building – specialised shipyard facilities, limited expertise and supply chain issues (particularly with by Covid-19 effects) – it is impossible to scale up quickly to meet the sharp rise in demand. In 2019, there were just over 350 new superyachts delivered. In 2020, fewer than half that amount hit the water; 2021 looks a little better.
Yacht values normally depreciate over time. But if a yacht’s market price remains stable or even climbs, it indicates a strong market. Our data shows that a 24m 2016 Sunseeker (a good example in production superyachts) continued to lose value in 2020, but remained stable in 2021, at one point selling for higher than its market valuation.
Using fixed-age analysis, which corrects for depreciation, we saw values rise strongly in 2021. Production yachts with displacement hull forms saw strongest increase in prices. During the height of the pandemic, superyachts were promoted by brands as safe, private places in which to isolate. However, consider the number of crew, contractors and daily trips ashore (for rubbish disposal, fresh provisioning and the like). You could argue that a superyacht is less safe than a competing high-end villa.
Our AIS position-measured data shows that utilisation rates of superyachts did not increase substantially in 2020 or 2021. In fact, 2021 utilisation rates were less than what was observed from 2013 to 2019.
We see demand for superyachts, and therefore superyacht prices, being tightly tied to growing wealth. Most global financial markets have firmed significantly since the beginning of the pandemic, especially the tech sector, which is now generating billionaires on a regular basis. Rather than a superyacht being considered a safe haven, it is more likely that a global pandemic has inspired thoughts among the ultra-wealthy of simply living for the day (carpe diem!). But can it last?
Demand must fall considerably in order to put a dent in prices. A shaky stock market could do exactly that. The new Omicron variant has put markets on a tougher footing. How that or other unknown variants may play out is anyone’s guess. There are plenty of other factors affecting stock prices and portfolios.
Superyacht deliveries will inevitably pick up in 2022 and 2023, as the massive order book generated in 2021 results in plenty of new supply. Meanwhile, the current high demand for a yachting experience means many new participants have entered the market quickly – they must be looked after well or they may exit the market fast, just as supply picks up.
About the author
Sam Tucker is head of superyachts for VesselsValue, a data and valuations firm providing up-to-the-minute values and analysis for maritime and aviation markets.