8 May 2014

END OF QUARTER YACHT SALES MARKET REPORT

The experienced Burgess brokerage team give their verdict on the state of the 40m+ yacht sales market at the end of Quarter One (Q1) 2014.

MARKET MOVEMENT

Q1 of 2014 has seen 23 yachts new to market, 71 price reductions and 20 yachts sold. The most activity has been in the 40-50m sector.

The number of yachts brought to market this quarter is slightly below that of Q1 2013, 23 versus 30, as shown by the graph opposite. The 50-65m market has grown by three yachts, including the notable yachts ANDREAS L and DB9. Overall, the 40m+ sales fleet is still growing slightly as more yachts are listed for sale than are being sold. In the larger size ranges there is still a relatively small number of new pedigree yachts for sale and this shortage is helping to drive the new build market in the North European shipyards.

Despite recent optimism, this quarter has seen a decrease in the number of sales compared to the same period last year - 20 versus 21 - although we think this is due to the timing of sales and the trend is steadily improving. Price negotiations are a major factor in the market and sellers are still having to be flexible on pricing to secure a sale. The 40-50m sector led the way in Q1 with 10 sales and, encouragingly, the 88m Lurssen QUATTROELLE was also sold in this quarter. While there is a steady return of buyers, there is still a large amount of inventory for sale, especially at the lower end of the market, and prices are predicted to remain soft for the near future.

MOTOR YACHT PRICE REDUCTIONS

Price reductions on motor yachts are slightly down on Q1 2013, with 71 versus 77. The average price reduction across the fleet was 13% and this has remained relatively steady over the last 18 months.

The 40-50m sector of the market saw the highest percentage of its sales fleet reduced in price, 20%, up from 17% last quarter. This size range is particularly competitive at the moment, with buyers having a good choice of yachts and being able to negotiate some great deals. Interestingly, 33% of the sales fleet in the 85m+ sector was reduced in price, with the 88m NIRVANA, the 86m ECSTASEA and the 85m CAKEWALK all having substantial price reductions.

While the brokerage market is currently offering good choice and value to buyers, the new build market in the pedigree North European shipyards is really starting to firm up. The large yacht yards have next available delivery slots starting to stretch out into 2018 and beyond. If a buyer is more price sensitive then the Italian and Turkish shipyards are still offering prompt delivery of a new build at very competitive prices.

SAILING YACHTS

The strengthening of the sales market at the end of last year has encouraged a number of owners who were holding off listing their yachts for sale to bring them to market. This has resulted in 15 yachts being listed for sale in Q1, significantly boosting the choice available for returning buyers. Three yachts were sold during this period, resulting in a net increase of the number of sailing yachts for sale. There is a really positive sentiment running through this sector at the moment and 2014 looks set to be a productive year.