By TBY | Mexico | Oct 30, 2014
Yachting and boating are traditionally associated with the affluent, and most typically with coastal elites in developed societies. This view however is partial, and even now is changing. This is […]
Yachting and boating are traditionally associated with the affluent, and most typically with coastal elites in developed societies. This view however is partial, and even now is changing. This is partly due to recent economic events; the 2009 to 2010 period saw a serious dip in the boating industry’s fortunes. It was not just that orders were canceled, but also the image of yachting suffered as well: instead of being seen as glamorous, it was now associated with the sort of wealthy financial professionals who had brought the global economy to the edge of meltdown. Moreover, the financial crisis eliminated part of the potential boat market; many of the people who might have typically aspired to own a luxury boat were deeply affected by the crisis. Yet times are changing, and now the market for yacht ownership has begun to expand to reflect the new vigor displayed in many emerging markets.
According to the Financial Times, Sunseeker International, Britain’s largest luxury yacht maker as measured by sales, reported that 2014 is one of its busiest years ever. Yet it isn’t Europe or North America that is driving the trend. The group announced that its fastest-growing market was Mexico, and moreover it has plans to open sales offices in Colombia, Panama, and Venezuela. This view of the emerging Mexican market is echoed widely across the industry. Nicholas Edmiston, Chairman of Edmiston, the well-known yacht broker, reported that 1,720 yachts—about one-third of the world’s yachts between 20 meters and 45 meters in length—are for sale, so there are worries about oversupply within the context of a shrinking market. However, “As an industry we’re having to look farther afield for new business,” he says. “I’ve just sold a boat to an Indonesian, we’re active in Brazil, and we’ve just taken a big order from Mexico.”
A MIDDLE-CLASS PURSUIT
By the end of 2013 the industry was showing signs of recovery after bottoming out in 2010, with smaller boats—typically those under 10 meters in length—showing particular strength. According to Denison Yacht Sales, in the US yacht sales slipped by 2% in March 2013 to 2,554 vessels, although it is worth noting that the price paid for those craft rose to $495 million (a 31% increase). The figures compared with 2,606 boats sold for a total price of $378 million in March 2012, according to YachtWorld.com. So the market is in flux; the regions where boats sales are healthiest are shifting, as is the type of boat sold. There are also different ways to own a boat. Fractional ownership of luxury boats is proving popular, and applies the same basic principles on shore, in the air, or at sea: it offers many of the benefits of ownership without the full burden of cost. Investors own a portion of a property, while in timeshare deals the buyer purchases holiday time over a given specified period, with no actual property ownership.
Moreover, the demographic of the typical buyer is also shifting. Although they do tend to target the high-end, moneyed market, as Roberto Aboumrad Ayub, Director General of Performance Boats, tells TBY: “The main market, which is what really sustains the boating industry around the world, is the middle class. This market segment is based on credit purchases, and we have yet to establish the effective financing of boats. The boating industry lacks finance companies, and the situation is worse than average in Mexico.” Furthermore, he also pointed out a number of secondary challenges facing the development of a boating culture in Mexico; for example there is no mechanism for the repossession for boats, nor is there is an established secondhand market for boats.
HOLIDAYS IN THE SUN
In the final analysis, most industry professionals agree Mexico is the place to be right now. This not simply because of Mexico’s growing economic influence; it is also in part due to the well-developed and expanding tourist sector. Sergio Igartua, the organizer and founder of the Cabo Marine Show, held in May 2014, had this to say; “The Cabo Marine Show is more than a boat show, and not just about the suppliers and brands, but also about the services available to all in this great international tourism destination that is Los Cabos.” As with many other sectors of the Mexican economy, the fortunes of the boating market are deeply interwoven with Mexico’s tourism industry. The Mexican coast is quickly becoming a premier destination in the world, and it is raising the fortunes of the boating industry as well. And yet the rule of thumb for yacht buying is quite simple: first and foremost, you need the money to comfortably afford and maintain a boat. And as always, if you need to worry about how much it costs, well, then maybe you can’t afford it.