Hard Times in the Mega Yacht Market
Spending by the world's super-rich has largely recovered in areas like art, wine, super cars and mansions. But there is one corner of Richistan where spending remains in a deep depression: super yachts.
Not that the industry musters much sympathy. But new orders for yachts over 130 feet are down by half since their peak in 2008.
"The business is bad, and it's been bad since 2008 when the crisis hit yachting incredibly hard," said Henk De Vries of Feadship, one of the top three mega-yacht builders.
De Vries said that orders for mega-yachts (usually defined as over 40 meters, or 130 feet) were running at 80 to 100 vessels a year before the crisis in 2008. In 2009, new orders dropped to about 10 — a fall of 90 percent.
Currently, he said orders have picked up again, to about 20 to 30 a year. While many say the industry's current cruise speed is more normal compared to the euphoria of 2007 and 2008, there are still far more mega-yachts than rich people who want to buy or rent them. (Read more: Russian Billionaire Builds World's Largest Sailing Yacht)
Industry executives cite several factors. While many of the world's super-rich have recovered their fortunes, stock markets remain volatile. Yachts have also become highly visible signs of conspicuous consumption and "the leisure class," and many of today's wealthy want to keep a lower profile.
"I think there's a little bit of a taint to owning a yacht," said one yacht-builder. "You go to the Med in a giant yacht now and everyone on the shore hates you rather than admires you."
Industry executives say that orders from the United States and Europe remain especially weak.
One bright spot is the "BRICs", the emerging economic powerhouse of Brazil, Russia, India and China; the new rich from Hong Kong to Rio de Janeiro are slowly starting to acquire a taste for yachting. (Read more: The World's Largest Yachts)
"In China, they are just starting to understand the meaning of buying a yacht," said Vincenzo Poerio, CEO of one of the largest yacht builders, Benetti Group, which recently sold two boats of more than 170 feet to Chinese buyers. "But China needs time. They are growing fast, but there is no fast in this business."
The good news is that for bargain hunters in the super-yacht world — an admittedly small club — prices for used yachts and charters have rarely been lower.
At the Ft. Lauderdale yacht show this week, which gathers over 1,000 yachts from around the world for sale or charter, the docks are crowded with signs for "special deals" and "reduced price." One of the largest yachts for sale is April Fool, the 200-foot Feadship owned by Sandy Weill, the former CEO of Citigroup.
April Fool just lowered its sale price by $10 million, to $59.5 million.
"It's an amazing price," said Jonathan Beckett, president of Burgess, the yacht brokerage and charter company. "The great thing about Americans compared to other countries is that Americans appreciate a deal."
-By CNBC's Robert Frank
Follow Robert Frank on Twitter: @robtfrank