Christmas has once again come and gone in a flash. Wine has flowed, presents have been given and received and hordes of pigs in blankets have met their demise. Is it, therefore, too early to start thinking about Christmas 2019? I think not. It is perhaps the curse of the journalist, given that it is our role to keep as up to date with the market’s various movements as possible, that at times progress can feel slower than it might to most. What I really want for Christmas in 2019 is for the market to start taking its own advice and approaching the future with a little reverence rather than over-confidence.
The mood in 2018 has for the most part been positive, but once again the numbers – soon to be revealed in The Superyacht New Build Report – highlight a market in stasis. ‘Next year will be better’, tends to be the knee-jerk reaction from the market. Will it? I am seeing very little evidence that 2019, nor indeed 2020 will be much better than 2018. It strikes me as odd that a number of market commentators elsewhere seem to unwittingly contradict themselves.
“The new build market will pick up. Orders are strong,” they say. And yet, it is the very same individuals that proffer that the consumption patterns of the world’s ultra-high-net-worth population have changed and that today’s wealthy much prefer to rent (charter) rather than own.
It is important to note that this phenomenon is not specific to the yachting market. If you consider that the ‘rent rather than buy’ mindset pervades all kinds of markets, from cars and private jets to homes and art, all of which are relatively uncomplicated when compared to the superyacht market, it does not paint a pretty picture of the superyacht market’s future. The desire to rent rather than buy is predicated on the idea that renting is simple, negates responsibility and offers an inherent exit strategy. By stark contrast, owning a superyacht has and is none of these things.
No one has really come up with a solution that meets the demands of these changing consumption patterns. Sure, there are fractional models and a number of charter platforms that have emerged as solutions to various problems. However, none of these models tackle the real issue of generating new-build business. Fractional ownership is an attractive model for owners that are tired of the lack of value conferred by owning a vessel outright and charter platforms. Whether it be traditional models or contemporary platforms, the charter market’s foundations are built on an ageing fleet, of which only a small proportion is really built for purpose and able to meet the expectations of the world’s ultra-wealthy.
“There are a number of emerging markets that look promising,” I hear you say. True, but these markets are no longer as divergent from the traditional yachting communities as one might think. People laud the second generation of wealthy Asian individuals as the golden goose. “While there are cultural differences, many of these individuals were educated in Western nations and are, therefore, far easier to engage in yachting.” True. But, if these individuals were educated in the US or Europe, does it not stand to reason that they will have developed similar spending patterns to Europeans or Americans? The same ‘rent rather than buy’ spending pattern that has everyone scared in the first place?
Add to this the uncertainty of Brexit, the possibility of a fresh economic crisis starting in Italy (a stalwart of the superyacht market) and all manner of weird and wonderful geopolitical pressures, and all I really want for Christmas 2019 is a few imaginative solutions and a preparedness to speak the truth.
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