Market Dynamics: How Yacht Brokers Successfully Navigate Fluctuations

What could be more alluring and life-affirming than owning a luxury yacht and skimming atop crystalline waters the world over? Those lucky few who can afford this sensational lifestyle are rewarded for their investment with a sense of freedom and adventure like no other. However, before purchasing or selling a luxury yacht, it pays to understand how the market operates, the optimum times to buy and sell, and how to maximise a return on that investment or minimise the cost of a new one. 

At Simpson Marine, we are dedicated to gaining ever-deeper knowledge of all aspects of yacht ownership, and an inherent understanding of the market is no exception. If you’ve ever dreamed about owning one of the world’s most luxurious, decadent vessels and how to go about it, read on. 

YACHT CATEGORIES AND THE EFFECTS OF MARKET SEGMENTATION

The definitions of yacht categories are as follows: 

• Motor Yachts—Any engine-powered yacht between roughly 12m (40ft) and 27m (90ft). Depending on the vessel’s primary use, they can lean towards extreme speed, fishing and other activities, relaxation, and decadence.

• Sailing Yachts—Although they come in various shapes and guises, including catamarans, racing, cruisers, and more, all are designed to experience the romance of sailing by harnessing the power of the wind to manoeuvre the vessel. Most sailing yachts have small onboard or outboard engines for navigating marinas or when the wind dies. 

• Luxury Yachts—Primarily designed for comfort and leisure, these premium vessels boast elegance at every turn, luxurious appointments and amenities, and are often operated and serviced by a professional crew. The term ‘luxury yachts’ also encapsulates those in the previous categories regarding size and providing quality and facilities of an equally impeccable standard. 

• Superyachts—With equal, if not higher, standards of excellence inside and out, superyachts are denoted by their additional size. The industry designates a superyacht as measuring over 24m (79ft) in length, and the largest can stretch beyond 100m (328ft).

• Mega Yachts—The next rung on the ladder of size and amenities, mega yachts can reach incredible lengths of over 180m (590ft). Although all yachts in the previous categories may carry luxury ‘toys’ and additional vehicles, mega yachts are unsurpassed in their scope and ability to do so. 

WHAT IS MARKET SEGMENTATION?

Market segmentation simplifies broader subjects (like ‘yacht market’) into more manageable, distinct categories. Although these will share many similarities when applied to yacht sales and purchases, there may be some significant differences depending on the type of vessel in question. The characteristics that define these subsets are not fixed but are often broken down into the following: 

• Demographics—The characteristics of any given set of individuals (in this case, potential yacht owners) often include factors like age, location, and income (for example, high-net-worth individuals [HNWIs] will be categorised as those with liquid assets of $1 million or more)
• Requirements and desires—Each individual or corporate entity will approach yacht sales with unique preferences and criteria.
• Priorities—Inextricably linked to requirements and desires will be aspects of any purchase or sale that are non-negotiable and prioritised over all others. 
• Shared interests, behaviour, and intended use—Cornerstones of any market segmentation are the reasons for purchasing or selling and the vessel’s primary function. There are significant differences between the categories of yacht mentioned above, and a sports fishing yacht bears few similarities to a superyacht in terms of form and function. 

YACHT BROKERS AND THEIR CRITICAL ROLE IN SALES

Yacht brokerage plays a pivotal role in trading luxury yachts. Before we examine why, let’s establish the term and highlight some of the responsibilities of a top-tier yacht broker.

• Brokerage services and yacht sales 

There is much more than meets the eye to facilitating yacht sales and brokering luxury vessel transactions. They require experience and an innate understanding of yachting and its associated culture. Some needed areas of expertise and functions yacht brokers perform include:

• • A detailed, up-to-date understanding of yachting technologies, manufacturing processes, and design trends
  • Accurate valuations and reasoning
  • Registration and insurance for the vessels
  • Arranging crews and contacting marinas

Yacht brokers wear many hats in performing their duties, from advising clients and negotiating deals to winning the confidence of key industry players and aligning expectations and desires with the realities of the market.

• How yacht brokers assist sellers

When representing sellers, yacht brokers conduct market research, establish price ranges, and arrange professional promotions in various ways. All this is done to garner the best possible exposure to the vessel and, hopefully, push desirability and price up. 

• How yacht brokers assist buyers

Brokering yacht purchases is a highly specialised service that aims to find the perfect match for each client. This requires clear, open communication between the broker and client to increase the chances of success. The task is to research available vessels, assess their condition, price, and suitability, and present a selection for approval. 

VALUATIONS AND STRATEGIES FOR MAKING ASTUTE INVESTMENTS

Although it is only sometimes a priority when purchasing a luxury yacht, as some buyers are more concerned with function, amenities, and luxury appointments, yacht brokers must assess the potential viability of any purchase as a long-term investment. Some of the factors they take into account and report on include:

• Strength of current value
• Predicted market trends
• Depreciation
• Style and function
• Running costs
• Desirability

WHAT KEY TRENDS ARE CURRENTLY INFLUENCING THE YACHT MARKET?

Even some of the most expensive purchases it is possible to imagine are not immune to trends and how they shape preferences and necessitate flexible sales strategies. Staying ahead of those trends is essential to the role of a yacht broker and can mean the difference between success and failure. Some key influences on the recent market and potential future trends include:

• An emphasis on sustainability— Responsible buyers are gravitating towards ethical practices and yachts with eco-friendly elements, including: 
• Sustainable construction materials— Many luxury yachts trend towards recycled materials and sustainable wood alternatives like bamboo. Non-toxic paints are also favoured, as these do not negatively impact delicate marine environments. 
• Hybrid engines— Harmful emissions can be reduced by installing engines that combine electric and diesel elements to reduce fuel consumption. Steady cruising and short bursts for manoeuvering around marinas can be performed using nothing but stored electricity, reducing their impact to zero.
• Hydrofoils and low-drag hulls— A hydrofoil is mounted below the hull (or across the keels of catamarans). Its winglike structure lifts the hull from the water at speed, significantly reducing drag effects and enhancing fuel efficiency.
• Treating wastewater— To reduce pollution, onboard systems can treat and recycle tainted water. 
• Renewable energy— Alternative energies are becoming highly prized in the luxury yacht community, from wind turbines and solar power to hydrogen fuel cells. 
• Customisation options and state-of-the-art technology—Modern astute buyers tend to be well-informed on the latest technological advancements and desire luxury yachts that already have them installed or can be customised to do so. 

HOW DOES SEASONALITY AFFECT YACHT SALES?

Seasonal fluctuations depend mainly on the vessel’s location, as more temperate climates with defined seasons will see a surge in demand during summer that tropical areas do not necessarily exhibit. These surges can lead to supply-chain issues, as can the low availability of materials at the other end. The industry is learning to produce vessels in shorter bursts to avoid falling foul of seasonal spikes, but they still exist in many areas. 

IS THERE A BEST TIME OF YEAR TO BUY OR SELL A YACHT?

• Buying— In seasonal climates, spring is typically a good time to consider purchasing a luxury yacht as new models are set to appear, and existing ones may be discounted.
• Selling— The best time to sell is generally between May and August, with the winter months best avoided.

WHY DO SOME YACHTS FAIL TO SELL QUICKLY?

Some common reasons luxury yachts remain on the market for extended periods include:

• Fundamental issues or damage
• Excessive engine hours
• Outdated models
• Unrealistic pricing 
• Amateurish listings with low-quality photos and insufficient details

CONTACT US

As we have seen, the dynamic waters of the luxury yacht market are only easily navigated with professional assistance. It is critical to engage the services of trusted, experienced brokers like those at Simpson Marine to stay ahead of the curve and make the best decisions. If you want to learn more about us and our premium yacht-brokering services, please do not hesitate to contact us. An experienced representative will gladly discuss your thoughts and provide any advice and information to assist.