INVESTMENTS: Yacht Sales Weather Economic Downturn
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Despite the recent downward spiral of local and global economies, which has greatly affected sales in various asset classes such as passenger cars and motorbikes, boat and yacht sales remain relatively steady.
“Recent sales figures have been good despite the current economic conditions,” says Derrick Levy, the owner of Boating World based at the Future Exotics Lifestyle Emporium in Cape Town. According to Levy, sales of smaller vessels have been affected; dropping by some 20-30%, but there has only been a slight slow down in the sales of larger boats.
Levy explains that people are buying boats for many different reasons. “Successful South Africans are looking for ‘the next best thing’ to capture their interest,” says Levy. “Often the clients buying exotic cars at the Future Exotics showroom are drawn to the boat showroom section. Pleasure seekers are looking for novel and enjoyable ways to spend their free time, which among other options includes cruising or fishing on the open water of the Cape peninsula,”. He adds that the boating experience is something the whole family can enjoy, which is a great attraction to buyers.
Another reason this market segment is still experiencing steady sales is largely due to what Levy calls a “portable investment.” In his experience entrepreneurs, some of who own hotels and game lodges invest in boats to offer their clientele an extra enhancement to their holiday or business trip. Some buyers also invest in their vessel as a ‘second home’ instead of a flat or townhouse for entertaining family and friends in a relaxed and unforgettable atmosphere. Business transactions are also easily conducted in such a unique environment, with the added bonus of whale, dolphin and seal sightings or fishing.
Levy advises buyers to make sure they know why they are buying a vessel in order to make the right choice to suit their needs. “Cape Town buyers tend to invest in luxury cruising style motor yachts to access the local harbours surrounding the beautiful Cape coast. Sport fishing yachts are popular for catching the huge Yellow Fin Tunny in the warmer current about 40 miles off Cape Town,” says Levy. “These are also very popular in Durban, Richards Bay and Mossel Bay where buyers enjoy the thrill of catching Marlin, Barracuda and Dorado while game fishing. Bottom fishing and cruising to the beautiful Mozambique island archipelago at Bazaruto has also grown in favour. South Africa’s good weather is of course a big contributor to the success of boat sales in the country.”
Another positive factor driving sales is that unlike a passenger car, a boat is an asset that does not depreciate sharply over time. According to Levy the initial depreciation in the value of a boat is much more reasonable and once the value steadies there is always the possibility of some appreciation over a few years, especially with inflation, as most imported vessels are based on offshore currencies.
The improvement of the marinas and yacht facilities for the ever-increasing size of the luxury vessels now coming into South Africa is attracting a growing number of local and foreign high net worth boating enthusiasts, who choose to enjoy South African waters instead of other countries.
“The South African market is small compared to the international boating market, but by concentrating on the clientele who can afford boats and yachts sales will continue to remain sound despite economic challenges,” comments Levy. “The partnership between Future Exotics and Boating World has been very beneficial in terms of reaching this market segment, as the cars and boats on display in the exclusive showroom target the top-end buyer. A client looking for an exotic car will often also be interested in a boat.”
Levy is confident about the prospects for boat and yacht sales for the remainder of 2008 and 2009. The summer season coupled with the current strength of the dollar and euro against the rand, means these luxury purchases are an attractive option as a dollar-based portable investment, for both local and foreign jet-setters visiting their Cape homes over the holiday period.
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