A fork in the road
The world is by no means out of the woods yet, but the industry does have a choice in its path out…
I must admit, I was surprised by the level of retrenchment from the superyacht industry in the wake of COVID-19. I know the phrase ‘batten down the hatches’ is a nautical one, but I had not anticipated quite how emphatically it would occur in yachting. Within weeks of European lockdown measures being implemented (or threatened in the case of the slow-moving British government), our market was a metaphorical ghost town.
Quite how the market will respond, now it is emerging from its bunker, is hard to gauge. The rhetoric is that clients have remained loyal, shipyard processes robust and safe, and market activity evident, if sluggish.
I believe this to be largely true, seeing as we did the surge in new vessels hitting the water, as works were allowed to resume (or ramp up for those yards that had remained somewhat operational throughout).
Sales too, are showing positive movement. Working alongside our strategic data partner, and the world leading ultra-prime real estate consultancy, Knight Frank, we have analysed the recovery of the superyacht sales market with that of London’s ultra-prime property market, both set against the performance of two of the world’s key wealth indices. What is immediately apparent, is that while superyacht sales market capitalisation has rebounded faster and stronger than any of the other trackers, it has still not returned to its pre-COVID levels, underlining the relative volatility of our sales market, in comparison to that of the property market.
But this upward empirical information - upward movement that is negligible at this stage – is clouded somewhat by anecdotal evidence that, as a journalist, I get from the countless conversations I have with every sector of the market. These conversations, which span continents, suggest a harsher market landscape – one of discord, illiquidity and a lack of direction. So many of the companies that populate our industry are SMEs – businesses that require cashflow, and a solid supply chain. These businesses are still somewhat unsure about how quickly and emphatically the market can come alive again, and whether they will be kept afloat.
The furore surrounding show season has certainly been the primary market topic to arise from the COVID-crisis, with some viewing the collapse of the show season calendar as profoundly harmful to their brand visibility, while others have seen it as the loosening of a millstone around their neck.
But regardless of your stance, the second half of 2020 will represent a completely uncharted territory for every superyacht business. Will we galvanise a new era of collectivism among our businesses, or will we revert to type? In my opinion, the trajectory of our recovery will depend on that answer.
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