Niche yacht orders measuring 100 feet or more and costing as much as $16 million are keeping the European luxury boating industry afloat.
That’s according to The Wall Street Journal, which reported that many of the yachts include fully wired boardrooms, karaoke studios and mahjong parlors and leave no room for bedrooms, a trend driven by China and other rapidly-growing markets.
On the face of it, the signs aren't good for the luxury yacht industry. Global yacht sales were expected to grow 2 percent, to 7 billion euros ($9.33 billion), in 2012, making it the worst-performing sector in the 212 billion-euro luxury industry, U.S. consultancy Bain & Co. said in a recent research note. Within that, worldwide sales volume of luxury power yachts — motorized vessels between about six and 30 meters — have fallen 30 percent since 2008, according to Princess Yachts.
But builders at the very top end of the market have seen rising demand for their products as the mega-rich continue to spend astronomical sums on marine opulence. In such a rarefied atmosphere, global economic problems mean little and service is everything.
"At the level we're operating at, it doesn't matter if China's growth drops a few percent or the U.K. goes into a triple-dip recession," U.K.-based Sunseeker managing director Stewart McIntyre told the paper. "It doesn't affect our client's ability to spend."
Sunseeker sits at the top end of the luxury yacht price range — its 115 Sport Yacht, unveiled last week at the London Boat Show, can be purchased "on the water" for about $14.5 million and costs $16,000 a month to run — and the company reported a 5 percent rise in overall sales in its last financial year.
The firm is expecting a repeat performance in 2013 and plans to take on more staff, as does its main rival, Princess Yachts, based in Plymouth, southwest England.
The U.K. leads the way in global luxury powerboat building, with an industry valued at 2.86 billion pounds by sales, according to the British Marine Federation. Other traditional European shipbuilding centers in Greece and Italy have declined since 2008 as the euro-zone crisis has strangled production.
Spending habits have changed since the financial crash in 2008.
"Clients have become more reticent to spend their money, but when they do they spend big and spend quickly," said Chris Gates, managing director of LVMH Moët Hennessy Louis Vuitton SA-owned Princess Yachts, adding that delivery times have dropped from 18 months to less than a year as customers demand rapid access to their investment.
Meanwhile, manufacturers building midrange yachts — those between 12 and 18 meters in length with price tags of as much as $800,000 — have reported falling sales as their clients trade down to smaller models or buy on the second-hand market.