Peaks and troughs
As the financial markets have recovered, so too has the brokerage market, proving that client desire remains strong…
A series of recent wealth reports have shed light on the rapid recovery of UHNW wealth globally. However, many of the pervading opinions in the superyacht market seem to suggest that such a recovery has not been as clearly felt within yachting. SuperyachtNews speaks with Raphael Sauleau, CEO of Fraser, about how the brokerage market has changed throughout 2020 and how it is currently performing with a mind to the upcoming US election.
“So far as it related to us, the end of 2019 was relatively good,” starts Sauleau. “We saw a decrease in activity on 2018, but the numbers were still strong, including charter which was actually up on where we were in 2018 because we had a good couple of early months of sales. At that point, all the lights were green and we were very optimistic about 2020.
“Obviously what came next was COVID-19 and we entered a period where no one truly understood the severity of it. In fact, most of us believed that lockdown would only last a few weeks. However, as countries began to close down then the charter requests dropped tremendously, as did the number of brokerage deals that were going through.”
It was the point at which various nations started to shut their doors to one another that the various global markets all but collapsed. “As the pandemic proliferated in the first few months of 2020, it virtually shut down part of the global economy, sparking a storm in equity markets. Just a few extraordinary weeks in February and March 2020 caused billionaire wealth to fall 6.6 per cent over 2019 and early 2020, by $564 billion, to $8 trillion. The number of individual billionaires fells by 43 to 2,058,” according to UBS and PwC’s Billionaires Insights 2020: Riding the Storm.
“Naturally, there was a really strong slow down in the amount of activity during the first weeks of lockdown. However, suddenly we began to see clients become interested again and requesting information on superyachts. During this period we invested significantly in technology to allow clients to view vessels effectively, whether that be through digital walkthroughs or various other methods,” continues Sauleau.
“We felt optimistic that there was a desire on the part of UHNWIs to buy superyachts. This particularly materialised when lockdown started to be lifted. Since July, however, we have seen a huge increase in boat sales throughout the industry. In fact, at the close of September 2019, 312 24m-plus yachts had been sold, while this year 325 boats have been sold, which represents an almost five per cent increase year on year despite COVID-19.”
Two factors have clearly impacted this steep increase in demand for purchasing superyachts. Firstly, and perhaps most importantly, the financial markets recovered extremely quickly. Indeed, according to the UBS and PwC report, by the end of July 2020, billionaire wealth was back above its 2019 level, thanks in large to “governments’ huge fiscal and quantitative easing packages” which “drove a recovery in the financial markets”. Indeed, without this recovery, it seems unfathomable that the brokerage market would have recovered as it did. However, one must further consider the mental state of the world’s ultra-wealthy population.
Throughout lockdown, whether you are an UHNWI or otherwise, most will have been reassessing what it is that is truly important to them. For many, this realignment of ideals will have manifested itself in the desire to travel and enjoy quality time with the friends and family that have, by dint of various geographical restrictions, been kept away from one another.
“If you compare the September figures alone for 2020 with 2019, we have seen an increase in sales of 52 per cent, that is huge,” explains Sauleau. “It should be noted as well that this recovery in sales has largely been driven by the US market, which accounts for nearly 50 per cent of all the sales. Now, however, we have the impending US election to contend with. That being said, this year has been extremely peculiar and we are not seeing the conservatism that precedes a typical US election.
“A lot of clients are seemingly not thinking as they would on any other given year. It may be that the result of the US election has an effect on sales once the result is known and any immediate legislative changes have become known, but currently, the result just doesn’t seem as important to people as it has done in previous years. It simply seems that clients’ personal enjoyment and demand for their passions is outweighing other considerations at present. We are, therefore, expecting to have another three or four strong months to finish off 2020.”
This desire for personal enjoyment, within a safe and secure environment, was highlighted within Wealth-X’s COVID-19 Wealth Impact: The World Ultra Wealth Report 2020. Within the report, it highlights that “There has also been a re-prioritisation for safety, security and well-being. Real estate agents are seeing demand spiral for high-end properties that are closer to nature and offer a greater sense of protection…”
While the report itself does not directly reference the superyacht industry, the growth in superyacht sales that Sauleau has highlighted strongly suggest that drawing analogy between the two markets is legitimate. Indeed, superyachts can offer safety, security and well being, as well as being able to offer the additional benefit of being transient. While the market’s recovery has primarily been driven by US domestic demand, and the US does not seem to be heading towards any further lockdowns, the growing likelihood of regional shutdowns across various European nations lends some credence to the benefit of owning a luxurious floating home.
In today's current climate, it is more important than ever that clients and potential clients are furnished with all the right information to ensure that their superyacht experience goes as smooth as possible. In this respect, The Superyacht Group is proud to introduce The Superyacht Buyer Report. This report represents a point of reference for buyers who are trying to navigate these challenging market conditions; a guide to every step of their journey, from their exploration of the market to the delivery of their new vessel. As a testament to the integrity and importance of this report, we have made it free for anyone to download. You can access it by clicking here.
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