By Lulu Trask
UHNW superyacht spending to grow 25 per cent by 2020
Following the revelation of a luxury consumer study that spending on luxury experiences is expected to reach 880-billion euros by 2020, Wealth-X has estimated the superyacht industry will see a 25 per cent growth in superyacht spending in the next six years, despite existing owners remaining cautious with ongoing industry investments.…
A study undertaken by Boston Consulting Group and Altagamma has revealed that luxury consumers will spend 880-billion euros on personal items and experiences in 2020 – a predicted growth of 20 per cent. This increase is linked to the expected rise in the number of luxury goods consumers – currently at 380 million and expected to grow to 440 million in 2020.
The survey outlined that the largest proportion of luxury consumers spend on average 10,000 euros a year on luxury goods, excluding cars, accounting for a significant 40 per cent of the market. This figure falls significantly under the average of the average Ultra-High-Net-Worth (UHNW) individual, Wealth-X told SuperyachtNews.com, however this figure and the survey's results still provide significant implications for the superyacht industry.
"In 2013, the average UHNW spent $400,000 on luxury items. What we certainly see throughout the luxury sector is the rise of bespoke luxury and purchases of experiences that are unique. This type of personalisation caters to the superyacht lifestyle and we believe is a good sign for the future of the industry," Wealth-X chief executive officer, Mykolas Rambus, told SuperyachtNews.com.
Wealth-X estimates that of the total luxury spend, $65,000 per UHNW goes towards yachting assets, accounting for an industry total of $13 billion, yet since the global financial crisis UHNW individuals continue to remain cost conscious when it comes to this niche industry of yachting, a trend that has manifested itself in the form of the purchasing of second-hand yachts, chartering or even buying smaller yachts with a lower fuel price tag.
However, economic movement is on the horizon, according to Wealth-X, who told SuperyachtNews.com: "In the next five years, Wealth0X expects the UHNW population to grow to just over 240,000 individuals [it currently stands at 199,235], with total UHNW wealth increasing from $27,8 trillion to over $36 trillion." These figures, moreover, are expected to have significant impact on the superyacht industry, with Rambus adding: "We estimate that by 2020, UHNW spending on superyachts will reach $16.3 billion – a growth of twenty-five per cent overall."
Wealth-X added that those markets that today produce those typically less enthusiastic superyacht owners, where wealth is generally less liquid, will be the source of industry growth, though initial growth is expected to arise from the cheaper alternative choices coming from Italian and Dutch superyacht owners. The luxury consumer survey, meanwhile, predicted named China as the primary source of these core consumers, while noting the expectation of those within the European Union, United States and Japan to reduce their spending by an estimated four-billion euros.
The results of the survey are promising, and while only three to five per cent of the world's 199,235 UHNW individuals own or regularly use a superyacht, with the mean net worth of today's superyacht owners at an impressive $680 million, the potential for industry growth is tangible. However, the state of the global economy is still playing its part, with Wealth-X postulating that the industry's core clients will remain cautious in their relationship with superyachts, focus on remodeling or financially most sustainable options. "In other words," the financial conglomerate concluded, "while the superyacht industry will see some of the growth expected in the wider luxury market, it has some years to go before it fully recovers from the global financial crisis aftermath, especially as it tries to penetrate new markets."
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Wealth-X