In the recently published Fraser Insights & Indicators Report 2021, the respected brokerage house paints a picture of the performance of the new build market in recent years, especially where it relates to the signing of new contracts and the commercial status of in build projects. With The Superyacht New Build Report scheduled for delivery on 23 February, which explores in great detail the performance of various new build sectors using a series of proprietary metrics, as well as analysing future trends and forecasting performance up to 2030, the Fraser report provides interesting complementary insight into sales-specific metrics.
According to Fraser’s report, there has been a significant decrease in the number of new build contracts signed, particularly since 2017 and 2018, which is somewhat at odds with many of the anecdotal reports that have been coming out of the market over the course of 2020. Indeed, many individuals in the legal, design and shipyard worlds have reported that new build interest has been strong. However, while 'interest’ may be strong, it appears that many prospective clients remain hesitant to sign the final contract.
Indeed, the figures highlighted in the report strongly support many of the assumptions that market commentators have been making as a result of the pandemic. With so many UHNWIs living in relative isolation, it is no wonder that some have felt the desire to inquire about new build projects, or indeed inquire about the availability of distressed projects. Speaking with SuperyachtNews earlier in the year, William MacLachlan, partner at HFW, expressed how busy the design community was at present. So, while new build contracts may be down, there is cause to believe that this market may pick up in 2021, depending on how the pandemic plays out in the near future.
That being said, one must be hesitant to put too much stock into the impact of the pandemic. In the pre-pandemic environment between 2018-2019, year-on-year new build contracts fell from 192 (2018) to 144 (2019), representing a decrease of 25 per cent. In fact, the results from 2019 and 2020 are the lowest they have been since 2014, suggesting that there may be other more fundamental factors at play.
In recent years, much has been made of widespread market consolidation, especially where it relates to the performance of new build shipyards. In the fall out from the global financial crisis, clients have seemingly become less risk-averse when it comes to selecting an appropriate shipyard, choosing rather to commission the services of established shipyards with strong financial backing and consistent delivery output.
Indeed, according to The Superyacht New Build Report, the number of active shipyards year on year has fallen from 65 in 2008 and to 35 in 2020. As a result, the number of available slots with desirable delivery times has also decreased. With 2017 and 2018 boasting strong new contract figures, it is perhaps unsurprising that this number has fallen in the years since given that a number of projects will need to be delivered, or at least near delivery before attractive slots become available at the world’s most sought after shipyards.
It could be argued, therefore, that the decline in new contract activity is directly linked to a lack of capacity at the major shipyards. With many of the world’s premier yards investing in infrastructure, whether that is through the development of new facilities or the acquisition of other businesses and their facilities, it is clear that these businesses are attempting to account for the lack of capacity as a means of stimulating growth. The recent interest in Perini Navi and its facilities, and the subsequent creation of a joint venture between Sanlorenzo and Ferretti Group, is just one such recent example.
For more information on the performance of the new build sector, look out for the publication of The Superyacht New Build Report on 23 February.
Image credit: Guillaume Plisson
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