IYC Insights: How The U.S. Elections Are Shaping The Yacht Market
Global events have long shaped market trends and behavior in the world of luxury yacht sales and charters. As we approach the upcoming US presidential election, with Donald Trump and Kamala Harris as the frontrunners, the superyacht industry is experiencing noticeable shifts.
Election years are pivotal not just for politics but also for businesses, markets, and individuals alike. They often challenge the stability of various sectors, and the yachting market is no exception. The concerns linked to the economy and purchasing behavior during this period are amplified in the luxury yacht sector, where high-value transactions are the norm.
As we fast approach November, the superyacht market has already begun to feel the impacts of this volatile period, with uncertainty and caution as the prevailing sentiments among both buyers and sellers. However, with challenges come opportunities. In times of flux, working with our expert consultants who understand the nuances of such a market becomes more valuable than ever, helping you best navigate the landscape.
Whether you are a potential buyer or seller, we have put together our insights into how the upcoming elections may impact the yacht market and what potential buyers and sellers can expect in the coming months:
The Market Today
The global yacht market is facing adjustment and correction, with superyacht sales declining by 17% (Superyacht Times' State of Yachting 2024) last year. Such an ebb after 2021 and 2022 can be partly attributed to the normalization following the post-pandemic boom. Today, while overall sales demand has slowed, particularly in the smaller yacht segment (24-60m), the 60-meter-plus market has remained resilient.
Our industry experts have observed a general sense of uncertainty among potential buyers, with many adopting a "wait and see" approach. This global economic and political uncertainty can deter purchases and potential upgrades, with prospective and current owners taking a more cautious approach. Many are in this holding pattern, awaiting results of what economic environment will develop before making significant purchases. While elections contribute to the state of the market, various other factors are also at play, such as the broader geopolitical climate, inflation, and rising interest rates—all contributing to the complex landscape.
Aside from these factors, the market is seemingly stabilising in 2024, and our experts anticipate a return to pre-pandemic levels and, therefore, a stabilization rather than a decline. Our positive 2024 charter summer season confirms the continued appetite for yachting and the longer-term outlook for the charter industry.
Effects Of Election
Contrary to popular belief, historical data does not support the notion that election years negatively impact yacht sales. However, uncertainty does influence buyer confidence and decision-making timelines.
Though not as severe as other global markets, the US is experiencing a slight downturn. According to the Superyacht Times, Monaco Yacht Show Report 2024, the US remains the most significant player globally, with American owners accounting for 23.7% of superyachts over 40 meters. As the US remains a substantial part of yachting, any change felt will be a catalyst on a global level. This uncertainty within the market is causing buyers everywhere to consider investment, not just those that are US-based.
This downturn can primarily point to uncertainty about the financial future, with potential buyers preferring to wait for a more transparent economic outlook post-election. The election's influence on the stock market is particularly significant, as it directly affects buyers' financial confidence and willingness to invest in luxury assets, like superyachts.
Strategies For Stability
The contraction in 2024 yacht sales has been partly attributed to normalization after a three-year post-pandemic boom; therefore, some signal this downturn and slowdown to be a more stable level of trading.
To navigate such a period of uncertainty, IYC consultants recommend a proactive approach. It is vital to closely monitor price reductions in the market and adjust listings accordingly to remain competitive. For buyers, this period of caution may present unique opportunities to benefit from competitive pricing. In contrast, sellers need to adjust the listing price and ensure to highlight unique features that set the yacht apart. No matter the election result, it is hoped that the market will stabilize into 2025 after a few months once a new candidate is selected.
Trends To Watch
Despite the slowdown, several exciting trends continue to develop in the yacht market. One in particular is upsizing. US owners are gradually moving towards larger yachts, both in length and gross tonnage - albeit, currently, at a slower pace.
Aside from larger yachts, another segment generating more interest and momentum is the demand for expedition-style yachts and support vessels, reflecting a shift in how owners are using the yachts.
The luxury yacht charter industry has also seen an uptick, as chartering is an excellent way for owners to offset costs during uncertain times. With over 160 yachts for charter in our IYC fleet, we have had 402 contracts booked for 2024 (YTD). With more demand for charter, this results in an influx of charter-friendly yachts designed to cater to both private and charter use. Many first-time buyers post-pandemic are now looking to sell and return to chartering versus ownership.
Here For Support
As it currently stands, the election polls are extremely tight between whether the US will see its first woman president or a second term for Donald Trump. While outcomes are impossible to predict, the market will remain fluctuating as it reacts to the election results on 5 November. Depending on the policies of the elected administration, new opportunities may emerge for yachting.
In terms of uncertainty, having an experienced consultant makes all the difference. At IYC, we are here to help our clients navigate these times as we constantly monitor market trends, policy changes, and emerging opportunities.
Whether you are considering buying or selling or want to discuss options in this dynamic market, contact one of our expert consultants today.