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Special Report: Super Yachts
As a way of measuring the global economy, this has got to be the coolest. From Abramovich’s Eclipse to a simple $250,000 a week charter, Kipp looks at the industry.
August 8, 2010 12:36 by Liz Peek
Wooten says that “the over-100-foot market was on a rage through the first quarter of 2008.” Cain confirms the froth. “Some buyers were ordering and then selling their contract halfway through the build period,” she reports. “Most builders globally had full order books, with wait periods of up to three years.” Wooten says that in the third quarter of 2008 – after Lehman failed – the market turned “squirrely” and then three months later “went vertical,” with orders simply disappearing off the page. Boat International reports that some 100 new orders were placed in the first three quarters of 2008 alone; in the final three months of the year, only two. In 2009, there were fewer that a dozen new commissions. Because of healthy backlogs, builders were busy through most of 2009, but then the downturn began to force layoffs and closings. Cain says that the industry produced 77 new custom super-yachts in 2008, but the number tumbled to 66 in 2009.
For builders, new orders are arriving in the nick of time. When the largest yards quickly sold out, new entrants emerged; many have since gone under. Backlogs have been sinking, thanks to a dearth of buying and rising cancellations. Some yards had begun to build hulls on spec during the heady buying spree, and so were stuck with un-bought inventory, as well as falling workloads.
Buyers today can count on quicker deliveries, but are unlikely to find that prices have receded much. Wooten says that yards have chased cheap labor around the world, but that most of the costs of a new vessel are fixed. A good portion of the total cost of a mega-yacht is focused on the interiors; flat screen TVs and Wolf ranges haven’t gotten any cheaper. This is not true for existing boats, where prices have fallen as much as 40 percent from their highs. Boat International reports that while 21 existing yachts over 24 meters were sold in May, 36 boats went on the market, and 33 price reductions took place.