Navigator Knows: Northrop & Johnson Sales Broker & New Construction Expert Joe Foggia shares incredible insight into what makes this sector of the industry tick.
Q: The yachting industry has seemingly recovered from the economic downturn of 2008. What impact did this global event have on the new construction sector in the yachting industry?
From late 2008 to late 2010, the financial crisis devastated the yachting industry. During that time, I was with Christensen Yachts and I remember not having one sales call for fourteen months. At Christensen, we actually diversified the workforce into renewable energy and began manufacturing wind turbines and hydrokinetic energy devices to be utilized in waterways, tidal flats and in-line freshwater supplies. The downturn was particularly extreme because it truly was global; all banks worldwide were not loaning money; hence all economies were suffering. Past recessions seemed to be more geographic, so if one economy was suffering, builders always could sell yachts to other
Q: Since the recovery, where is the new construction sector of the yachting industry?
In the 50-meter sector, although the perception is that this market became saturated from 2011 to 2015, it looks like there still is a lot of potential here. There always is a demand to have as much yacht as possible under 500 GRT. However, builders need to command higher pricing for these yachts. The concepts of these yachts are still custom (not production) and because their costs are now typically more than $30 million to produce, buyers will want to personalize them. There are a great number of yachts currently being built in the 60- to 90-meter sector. This area commands the proper pricing. The majority of these yachts are primarily built in Europe. The 100-meter-plus sector of the market has been booming. Most of these superyachts are being built in Germany and Holland; however, due to the demand, many are now being built in Italy and Turkey.
Q: Where do you foresee the new construction sector of the yachting industry in a year, three years or five years?
Overall, I will answer this relative to the trend throughout the last thirty years. Size matters and I am not sure where the limit is, but it is conceivable to see much larger, island-like platforms and tanker-style yachts.
Q: What is the most important thing for an owner to keep in mind when choosing to build a new yacht from the keel up?
Always keep re-sale in mind through every phase of the design and build. One day the owner or the owner’s family will need to sell the yacht. If the layout is universal then everything else can be changed to accommodate new interior finishes, furnishings and systems.
Q: What is your best advice to an owner in the middle of a new construction project?
Make sure to have your surveyor check monthly that percentage of completion matches the milestones reached and the agreed payment schedule. Additionally, all subcontractors and vendors must be figured into the equation as to what extent they were paid and if those payments are up to date.
Q: What are the biggest trends you see and foresee in the new construction sector?
As has been displayed by Feadship, I think structural glass not only will be used for huge windows and doors, but also for complete wall systems and even beach clubs/garage doors. It is conceivable to see more glass than other structural materials utilized. Glass is very strong, non-corrosive and can be molded in many shapes and sizes.