Arguably one of the most comprehensive explorations of world wealth, Credit Suisse’s annual Global Wealth Report for 2013 has just been published and has revealed that the global wealth currently held by 4.4 billion adults has increased 72 per cent since 2000, today reaching a total of USD195 trillion. Looking at the top of the wealth pyramid, this means that there are over 1,000 billionaires globally.
As usual, the emerging wealth of nations like China, India or those in the South Pacific is interesting, with China in particular standing out as the third-largest wealth generator in the world, accounting for nearly 50 per cent of the increase in the wealth of the world’s emerging economies. In terms of UHNWIs though, the US leads by a huge margin. Credit Suisse’s report shows that the economic recovery in the US for its wealthy citizens has been surprising—significantly better than the rest of the world—with the US emerging with its fifth successive year of rises in personal wealth. With over 45,000 citizens worth more than USD50 million, it has almost double the UHNWIs of Europe and almost eight times the number in China.
The question is: what do these figures mean for the superyacht industry? The US market has been slow over the last few years. From a build perspective for example, a report by Superyacht Intelligence revealed that while there were 100 projects on the order book in 2009 in North America, today it is closer to just 30. However, the consistently rising levels of personal wealth and stabilisation of the economy surely means that it is now time for confidence to return. Banks are lending more freely, the stock market is reaching new highs, unemployment rates are falling and real estate is bouncing back.
"The increasing global wealth picture and the economic recovery in the US market certainly bodes well for the superyacht industry,” Todd Beechey, president of OceanScape Yachts says. “Owning a superyacht is still the ultimate prestige symbol, and with the growth in wealth, theoretically there should be more and more people in the market looking for that opportunity to celebrate their new found financial status with a big purchase.”
All signs are certainly pointing towards the US market bouncing back. “From everything that we are seeing at the moment, the US market does seem to be picking up,” says Toby Maclaurin, commercial manager at Ocean Independence. “The American brokerage houses do seem to be busier. Our office in Fort Lauderdale is definitely busier.” Last week, a real feeling of positivity permeated the Fort Lauderdale Boat Show, with Herbert Baum, chairman and founder of Sunrise Yachts, telling us confidently: “the Americans are back.” According to Baum, analysis of the Sunrise website has shown a massive increase in hits from US IP addresses in recent months, perhaps not as exciting as contracts being signed, but a good indication that the US market is stirring once again.
Beechey is careful to pair his optimism with caution though. “We believe that people have learned some valuable lessons in the past five to six years, and may not be so quick to jump in with a multi-million dollar purchase,” he warns. “There continues to be a great deal of uncertainty in the US economy. The political instability, where the two parties cannot work together on growing the economy, is a major issue. It's the reason the solution to the government shutdown was not really a solution, but a bandaid, and people may sit on the sidelines until that picture gets a bit clearer.” For him, there are still fundamental issues in the US economy that must be dealt with, such as demographics (“this is a big one; the aging population”), high debt levels, under-employment and sources of inequalities (gender, income gaps, etc). “These are huge issues, which involve tremendous cost and may hinder or delay the long term outlook on growth,” he stresses. “With that said, there is no denying the fact that more people have more disposable income available to spend. These people will want to enjoy the lifestyle that time onboard a superyacht represents, but we think the trend is that they will want to rent those luxury experiences rather than own them; and this is where the opportunity for the superyacht industry to grow lies."
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