The luxury yacht market Is showing steady improvement as buyers again turn to local boats because the drop in the Australian dollar has made European and American purchases too expensive.
Supply has also tightened up following a dramatic production cutback by luxury boat builders during the global financial crisis.
Demand for 80ft-to-100ft luxury boats costing between $1.5 million to $3 million in particular has picked up over the past few months and the 18 per cent fall in the Australian dollar to below $US0.80 since September, 2014 has in part fuelled renewed interest in the local market because buyers who were previously eyeing vessels in Europe and North America have had their offshore spending power cut by the currency shift.
There is a large market in secondhand high-end luxury boats, and industry players say the dramatic cutbacks in production levels in 2008 and 2009 by luxury boat builders has crimped supply, and that drying up of availability has also been behind an improvement in turnover and a levelling out of prices.
But a huge drop in prices of luxury boats during the GFC hasn’t fully recovered.
Geoff Lovett International, a luxury yacht business that operates from the Gold Coast and Rozelle in Sydney, has noticed the improvement, but it isn’t fully mirroring the jump in demand in the luxury car market, where brands such as Maserati and Lamborghini are both experiencing record sales.
Perry James, senior broker at Geoff Lovett International, says demand is rising.
“Certainly in the last 12 months the demand has increased but I’m not saying the prices have,” he says.
He says the prices of many vessels dropped by up to 50 per cent in the GFC, with the market hit very hard.
But that had now improved even though prices hadn’t recovered back to the pre-GFC levels.
When the Australian dollar was at its strongest in late 2011, trading at $US1.10, the business was regularly accompanying many customers on luxury boat buying trips to European and North American marinas armed with extra spending power bestowed on them by the strength of the Australian currency.
“There were a lot of people buying overseas”.
Luxury boat builders cut back hard on new production levels during the GFC and this had flowed through to the broader market and there were fewer boats to choose from.
“Stock is tight,” Mr James says.
Smaller luxury boats, which sell for prices starting at $200,000 and stretch to $2 million for a top-of-the-range 60ft vessel, hadn’t been subject to the same large fluctuations in value, and demand was rising in that market too.
David Beck, director of Sundance Marine, which operates from locations in Sandringham and Williamstown in Melbourne, and Hobart in Tasmania, is preparing to open a Sydney outlet in the next few weeks to cater for increasing demand for high-end luxury boats under the Monte Carlo brand.
“There are more things happening and we are busier,” Mr Beck says. He thinks the Queensland and Sydney markets were bruised more in the GFC than the southern capitals. “Ours was more of a flat curve.”
Mr Beck says confidence is returning to the market, and more customers are upgrading. “It’s going along better than it was”.
But he says for many high-end customers boating is a pastime, like golf or restoring classic cars, and they don’t stop owning boats during an economic downturn.
Luxury car sales have been booming despite a luxury car tax 33 per cent the value of a car that, including accessories, exceeds a threshold, now $61,884 for regular cars and $75,375 for fuel-efficient vehicles. Luxury yachts and private jets don’t attract any specific luxury tax.