Worldwide luxury yacht orders end decline

December 6, 2010

For those seeking global economic indicators that also forecast future spending and consumer confidence, there is no more glamorous indicator than orders for luxury yachts. The commitment of capital for a discretionary item that may take three or four years to build is certainly an indicator not only of current wealth, but also of long-range confidence.

ShowBoats International magazine has just released its report of yachts over 80 feet under construction at shipyards around the world and it notes there are currently 749 such gorgeous creatures underway or on order. Called Global Order Book 2011, the report is a snapshot of the superyacht industry and shows projects with completion dates as far out as 2014. To qualify for inclusion in the report, yachts had to be either underway or on order with a firm deposit in the hand of the builder as of September 1, 2010.

The 749 yachts in the 2011 Global Order Book represent good news for an industry hammered by the world-wide economic collapse; the steep decline in orders has nearly stopped and owners are expressing optimism for the future by once again committing to build yachts of the size that employ professional crew.

ShowBoats International, now part of Boat International Media, has been tracking new yacht orders since 1991. In 1991, the magazine found 205 projects underway and the largest boat in construction was 241 foot Eco, being built at Blohm & Voss in Germany for the late Mexican billionaire Emilio Azcárraga. On the 2011 list, the largest yacht is the 533 foot Eclipse, also underway at Blohm & Voss and soon to deliver to Russian billionaire Roman Abromovich.

“Since we began collecting Global Order Book information, the high water mark occurred with the 2009 list where 1,016 projects reflected the uptick in yacht buying that began in 2006 and lasted until exuberant excesses flung the economy off the cliff,” said the magazine’s Acting Editor, Marilyn Mower. “This year’s Order Book is similar in quantity to that of 2006, although the average length of today’s orders is larger, and yacht building as an industry is more global. In 1991, the top builder nations were the U.S., Italy and The Netherlands. Today, the top builder nation—as measured by the number of linear feet of yachts in build—is Italy, followed by The Netherlands, Turkey, and the U.S. Taiwan and China, home to several highly regarded exporters of large fiberglass yachts, are ranked seven and eight, respectively. Speaking of linear feet, if all the yachts on order were placed end to end, they would stretch 99,324 feet or about 18.8 statute miles.

U.S. and German yards have born the brunt of the contraction since 2008. The U.S. has slipped from second to fourth on the leader board, both in terms of the number of projects—64—and the total length of feet of yachts under construction—8,424. The decline is especially painful considering that the 2008 Order Book showed U.S. yards busy with 104 projects. The loss in orders has resulted in significant job cuts at U.S. yards.

While the 749 projects is slightly less than that in the 2010 Order Book (763) it represents a small 2.09% decline much smaller than the 23.08% decline between 2009 and 2010. Also, many of the yachts ordered in 2008 were delivered this year. Of special significance, however, is that there are more very large (above 250 feet) yachts on order now than there were before the collapse. In fact, the only categories showing a decline over last year are the 80 – 89’ and 90-99’ categories.  Interestingly, sailing yachts (87) and expedition yachts (32) have taken larger slices of the pie, perhaps indicating that yacht owners increasingly want to “get away from it all” and do so in as green a fashion as possible.

The new order trend is continuing to tick upward following the important autumn boat show season; there were seven new orders in October bringing the total number of new orders this year to 53, eight more than recorded in the whole of 2009, and one new order for a 344 footer was just inked by a Dutch yard this week.

Full stats with charts, graphs and individual listings of all the projects are in the current December/January issue of ShowBoats International and also available electronically through Zinio or the magazine’s iPad application.

While Global Order Book is an annual tally, Boat International Media also collects monthly sales figures for both new and brokerage yachts and reports them on the Superyacht Market Intelligence section of its website, boatinternational.com.

These market reports published each month track the international sales of pre owned private yachts over 80 feet in length. So far this year, 162 used yachts have sold, an increase of 5% compared to the previous year. “Much more significant is the fact that we are approaching the €2 billion mark (2.679 billion) in activity as €1.92 ($2.5b) billion worth of yachts have changed hands to date, compared to €1.5 billion $2b) this time last year, an increase of 28 percent,” Mower said.