Cannes Marina welcomes the world’s super-rich and their boats

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All summer long the sea lanes from Nice to the Caribbean have been packed with yachts. So much so that anyone could be forgiven for believing that yachting is enjoying a golden era. But parts of the market are far from buoyant, struggling to recover from the downturn that began with the financial crisis in 2008.

Moreover, something of a pall hangs over the Monaco Yacht Show that starts today. It is difficult not to contrast the concentrated wealth in billions of euros’ worth of leisure craft at anchor, for the use of a fortunate few, with the plight of thousands of refugees and migrants not far away on the other side of the Mediterranean, risking everything in leaking hulks for the chance of a better life in Europe.

But the refugee crisis will not dominate concerns in the bars and restaurants around Monaco’s Port Hercules this week. Yards and brokers are hungry for customers and, in the superyacht market, the focus is on a tiny percentage of the world’s billionaire elite. In spite of the falls in oil prices and the rouble, market nervousness over China and continuing strife in Syria, demand for yachts endures among the super-rich.

“Big builds at the top end of the market, 70 metres and beyond, among half a dozen high-quality yards, are enjoying good times with little spare capacity,” says Martin Redmayne, chair of the Superyacht Group, a stable of industry publications. “But parts of the sector have fared poorly in the last year.”

Following the closure of New Zealand’s Fitzroy Yachts in 2014, Alloy Yachts, another New Zealand builder, was forced to lay off most of its workforce this year, keeping on a skeleton staff in the hope of orders and investment. Christensen Shipyards in Vancouver, meanwhile, went into receivership in the spring, and a number of Italian yards are under pressure with flagging orders. In the Netherlands, Moonen Yachts has suspended production.

This month, Palmer Johnson Yachts, known for an eye-catching range of super­yachts, announced it was moving production from its Sturgeon Bay yard on the shores of Lake Michigan to the Netherlands before the end of the year, with plans to focus on its composite SuperSport series of yachts. The Palmer Johnson move is the strongest indication yet that northern Europe is consolidating its dominance at the high end of the market, where shipyards such as Lürssen and Abeking & Rasmussen in Germany, and Feadship, Oceanco and Amels in the Netherlands, all have strong order books.

“The top yards are doing well, but there are a huge number of yards with stalled orders, delayed contracts, speculative builds and unsold boats,” says Mr Redmayne. “What we see in the order book is often a poor reflection of reality.”

This year, the annual report of Superyacht Intelligence lists 68 yards among 181 builders worldwide that have delivered just one 30-metre-plus yacht each in five years.

“If someone risks building a one-off yacht at a [yard] that has only built two yachts in the past five years, you can imagine the potential for fallout,” says Mr Redmayne. “Clients must be surer than ever in due diligence when choosing a yard.” The trend in the superyacht sector, he says, is moving to about 50 yards producing most of the inventory.

In the higher-volume powerboat market, competition among builders is fierce, as relatively new owners of some brands demand improvements in sales and profits. The Chinese owners of both Ferretti in Italy and Sunseeker in the UK have made management changes after their respective takeovers. Late last year, Dalian Wanda recruited Phil Popham, former Jaguar Land Rover group marketing director, to become chief executive of Sunseeker.

Mr Popham has already put his stamp on the business, reshuffling his team to include seasoned professionals within the business, plus others brought from outside to tighten up governance and manufacturing disciplines.

“It’s a fantastic brand and great product, but longer-term planning has not looked as far as it does in the motor or aircraft industries. We’re moving to seven to 10 years’ product planning, and five to seven years’ business planning,” he says.

After 300 job losses, the company is recruiting again, including 38 new apprenticeships.

The company recently celebrated selling its 100th yacht of more than 100ft (30m) long, emphasising its contribution to the superyacht sector. Its main British competitor, Plymouth-based Princess Yachts, has responded to difficult market conditions by extending its product range after pushing out is own series of 100ft-plus yachts — the M class — in three years.

Chris Gates, managing director, says he expects sales to be higher in this, the company’s 50th anniversary year, in a difficult market. “We’re working hard, broadening our customer base and bringing out new products.”

Italian yards and companies, meanwhile, are experiencing mixed fortunes, although family-run Azimut Benetti continues to thrive after selling a 12 per cent stake to Tamburi Investment Partners, whose chairman Giovanni Tamburi, himself a yacht enthusiast, has joined the Azimut Benetti board.

Such developments point to increasing professionalism in an industry responding to clients looking for a depth of experience. Traditionally, a proportion of new-to-market buyers are generated from charter, which has performed well this summer among the biggest yachts. “You couldn’t find anything to charter over 70m after the end of July,” says Barry Gilmore, executive chairman of Royale Oceanic, the superyacht services company.

“Most of the bigger, quality yachts have sold in the second-hand market,” he says. “New construction, on the other hand, is a mixed bag, still quiet across many areas. But we could be on the verge of an upturn. People seem to be becoming more interested in yachts.”

Mr Gates at Princess Yachts, however, is less sanguine. “We have to accept that today’s market is the new norm,” he says.

Copyright The Financial Times Limited 2017. All rights reserved.
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