Abu Dhabi Yacht Show Preview

 

It is hard to know what the yacht industry is really expecting from 2010; the boat show season that started so optimistically at the end of the 2009 summer with Cannes and Monaco Shows was eagerly anticipated as the hopeful turning point in an otherwise stagnant year.

 

But it was not to be. As the boatshow season continued with Barcelona, Genoa, Fort Lauderdale, Paris, London and Dusseldorf, the empty stands and unrealized sales continued the established trend: potential buyers were putting in low bids which were reluctantly accepted by over keen sellers. After long negotiations sales were still not completing, leaving frustrated brokers and disappointed sellers behind.

 

There are clear reasons behind this. Firstly, in a distinct buyer’s market the majority of the sales realised in 2009 were at levels considerably lower than the asking price and the value of the yachts for sale. Not only were production shipyards clearing inventory and destroying the used boat market, but the only ‘superyachts ‘ over 24m sold were at 50-60% of their asking price.

 

The whole method of yacht purchase changed and it was not about value. Traditionally, a Buyer would inspect a custom yacht first before making an offer; the eventual offer being treated with more respect in negotiation. Now it seems the offers – usually insulting low in the first place – are made on a range of yachts prior to inspection and then, often after weeks, when the Seller is really hurting, the negotiation begins!

 

Super yachting has traditionally been the preserve of not just the super rich, but also the super cognoscenti. These are people that know the value of leisure, real luxury and can afford the very best in life. But at that price it has to be right: and getting a bargain is not always going to make you happy.

 

Saving $2,000,000 on the asking price of a yacht is only going to be acceptable if every time you notice a fault you think of the $2,000,000 saved, but in reality few of us will remain content with such a scenario. The way to enjoy the last luxury is to buy the right boat; chasing the bargain and not the boat will never be a happy match.

 

I do not think the blame for this lies entirely with the Buyers. Brokers are usually quite happy in a recession; the inventory of yachts for sale rises and the prices come down. This time they have not been so happy with a glut of yachts of sale – the equivalent of the fields of unsold S-Class Mercedes in S. Florida that the dealers have ordered and no-one wants to buy – or the buyers that still cannot commit even when they have negotiated a rock bottom price.

 

2010 has seen a slight turn-around in the market; sales are up threefold from this time last year – that is still not many yachts – but the aggressive tactics of the brokers and the seeming desperation of the sellers they represent, suggest the bottom has not yet been hit, so the majority of Buyers are still waiting for bargains in store which suggest we have some way further to go.

 

With “ massive price reductions” in the millions announced on a daily basis by the brokers, confidence will not be restored until these tactics stop. Clearly some sellers are desperate, but it still seems cruel for buyers to be baying for their blood as well.

 

This week is the Abu Dhabi Boat Show (25-27^th March) – owned by Informa Group (owners of the Monaco Yacht Show and the largest organiser of  exhibitions  and  conferences world wide) – and the sentiment is that it will prove the catalyst that keeps the yacht industry in the fast lane. In 2007 Fortune magazine ranked Abu Dhabi the richest city in the world, and this tiny country is certainly one of the world’s biggest oil producers. With 400 Km of coastline and 200 offshore islands there is a clear possibility that Abu Dhabi will become an important market in the future, but it will be predominantly a local and charter market than a cruising destination. Already they have plans for 45 marinas by 2030 and coastal developments are still underway.

 

But whilst Abu Dhabi will benefit from the attention of the yachting industry this year, which believes it will mark the reversal in fortunes, it is not clear that the recent boom times will return any time soon. Yacht sales may be up (Boat International’s Market Intelligence reported 14 super yacht sales in January this year in comparison to January 2009), but new orders are dramatically down in a sign that the yachting industry maybe saturated.

 

Abu Dhabi Yacht Show is closely followed by Dubai International Boat Show (9-13 March) and then the more local Antibes Yacht Show (8-11 April). These are the pre-season shows, so let’s hope they will be full of buyers looking for the boat of their dreams, however, with the fall off in new yacht building now may be the last chance to get the deal of their lives – if that’s what they really want.