The superyacht market is fundamentally global. All geographical markets are interconnected – the major brokerage houses have clients all over the globe and as Wes Sanford of Northrop & Johnson pointed out in our H1 2012 market report (last issue) ‘most [superyacht owners] have exposure around the world’, so economic factors in one region will affect owners elsewhere.
Nevertheless, many brokers we’ve spoken to in recent months have asserted – some tentatively, some enthusiastically – that the US market is looking particularly healthy this year. So while American buyers, sellers, brokers and yards are certainly doing business around the world, we asked two top US brokers if the sun is shining on the US right now.
‘We got the crisis first of everyone, and we were months ahead of the European market in recovery,’ says Fernando Nicholson, a senior broker at Camper & Nicholsons, ‘In America after four or five years of crisis and negativity, little by little, jobs have been recovering and people are less afraid to spend money. The banks are easier in the lending as well. In Europe you try to get finance from a bank and they will laugh at you.’
Kevin Callahan, sales and construction manager at Moran Yacht & Ship, has also found American buyers keen. ‘I just listed an $8 million boat and it’s getting action like you can’t believe. It won’t take a month to sell this boat – in the past week we’ve had maybe six real buyers coming by. It’s priced correctly. If things are priced correctly, people are moving on them.’
In terms of what’s in demand, Callahan says, ‘The $7-10 million range seems to be fairly active and guys are always contacting us to see if any of the 60m-plus that we are building are for sale, which unfortunately they’re not.’
Nicholson has found that while the top end of the superyacht market is moving and certain brands, such as Westport, are perennially popular with US buyers, yachts between 20 and 35 metres aren’t shifting. ‘The middle of the American top class has been hurt a lot. They are over-extended, they have houses, mortgages. These come first and yachts come afterwards. Yachts is a fixed expenditure every month, a house doesn’t cost you so much.’
A discussion of American buying habits throws up an interesting general characteristic. ‘When there is a crisis in America they always look internally, to their own market,’ says Nicholson. ‘They will buy Christensens, Westports, Hatteras. Then they will start looking for value and buying boats maybe in Europe. ‘Americans would prefer to buy an American branded boat. When they don’t find that, they will go to European branded boats.’
In contrast, there is much anecdotal evidence to suggest that European buyers are far less likely to go to the American market, than Americans are to look at the European market.
Callahan has found this to be true even when exchange rates mean it makes great financial sense for Europeans to buy American: ‘It’s funny, when the euro was way up you didn’t see as many Europeans flocking to the US to buy up deals.’
Different tastes in styling may be a factor, but Nicholson believes choice is also key. ‘The number of boats in Europe is five times greater than in America,’ he says, ‘and in America you have very few yards; in Europe you have many.’
With 38 US-built superyachts sold on the brokerage market by the end of July (compared with 35 in the whole of 2011), buyers certainly seem to be snapping up American boats. If, as the previous comments suggest, the buyers (and therefore sellers) of American yachts are usually American, then the US market may indeed look sunnier.
But what of the current state of the yards that built these boats? ‘A lot of the shipyards are in the same position in the US and Europe,’ says Callahan. ‘There are some shipyards that haven’t signed contracts in years in both Europe and the US. Luckily we deal with some of the top shipyards and they’re busy because quality shipyards should always be fairly busy. He also notes that his company recently signed a large deal in the US. ‘The 215 foot (65.5 metre) boat that was done this year – that kept hundreds of people employed at Palmer Johnson.’
Meanwhile, Nicholson has found that prices in some US yards are not competitive enough. ‘I would love to build in the US, but the prices are a little higher than Europe,’ says Nicholson. ‘This year I’ve signed two new constructions – a 54.5 metre and a 57 metre to American clients who considered US yards, but decided to go to Italy and Turkey as it was cheaper.’
‘The US import many things and the labour costs are a little higher perhaps. If you put a fantastic team on the owner’s side with good surveyors, people who can take a decision very well, you can build a good boat in China, Japan, in Turkey – anywhere. And people are looking for value now.’
Callahan describes the US market in general as ‘steady’ and Nicholson says that compared to last year US buyers ‘have more confidence’. But the upcoming Presidential election could encourage them to wait and see what new taxes the new regime will usher in. ‘That might hold true for some buyers, with the uncertainty of what the tax rates are going to be,’ says Callahan. ‘But then there are other guys who say “the hell with it, I’ve earned it”. Most of the guys that can afford a yacht employ an awful lot of people and it’s a place to get away.’
Nicholson also notes that there is not as much uncertainty in the air as an outsider might suspect. ‘If this was happening in Spain you don’t know what is going to happen. But in the US it is much more clear and open. They will know very much in advance what the tax situation will be,’ he says. ‘Also, the lobbies in Washington for the yachting business are huge.’
‘I don’t think there is going to be any impact. If people make money in America, they will buy a yacht, it’s something that they have in their heads.’
Brokers in the US will certainly agree then – long live the American yachting dream.