Yacht market experiences boom in Brazil – 02/04/2023 – Market

Millionaires and billionaires have never bought as many yachts as they do now. Driven by the pandemic, the luxury boat market has reached an unprecedented level in Brazil, with record sales and interest in ever-increasing sizes.

The demand has been so great that prompt delivery has practically stopped. Those who insist on a specific model only have the option of waiting.

The queue for some of the most desirable boats reaches two years, as is the case with the Grande 27 Metri. The R$ 55 million superyacht is produced by the Italian brand Azimut and gained notoriety after being acquired by the player Cristiano Ronaldo.

Specializing in large vessels, with models starting at BRL 8 million, the manufacturer opened its only shipyard outside Italy in 2010. The place chosen was Brazil, more precisely in Itajaí (SC), which produces around 45 vessels a year.

Francesco Caputo, CEO of the company, says that this is the best moment that the sector has experienced in its history. “A [indústria] nautica fell on the right side of the pandemic. It was a complicated, dramatic event, but for some sectors it was a big boost,” he says.

Regarding the 27 Metri, he does not deny that Cristiano Ronaldo helped to increase interest in the model, but the heating up of the market also explains the high demand. In Brazil, 12 vessels of this type have already been sold, and another 60 in the rest of the world.

Although there is no official standard, motorboats over 60 feet (18 meters long) are considered yachts. Over 80 feet (24 meters) are called superyachts.

Based on customer behavior, the prevailing logic is “the bigger the better”.

Eduardo Colunna, president of Acobar (Brazilian Association of Boat Builders and Implements), says that choosing increasingly larger yachts has become a trend. “The percentage of people who buy their first boat and go up to larger ones is huge.”

According to him, the profile of luxury boat owners is mainly composed of businessmen, who want to have a boat to use on weekends, as if it were a beach house.

Among the most popular destinations to sail are the north coast of São Paulo, Paraty (RJ) and Angra dos Reis (RJ). Despite the extensive Brazilian coastline of 7,500 kilometers, only a minority travels long distances. “In Brazil, there isn’t much of this tradition. Usually you sail around [da região onde se está]”, says Colonna.

Gabriela Lobato Marins, CEO of BR Marinas, also noticed the increase in vessel size. The group has eight bases in the state of Rio de Janeiro, including Marina da Glória, in the capital.

“We have 2,000 boats [atracados], and the average foot increases every year. This means that the person who had a smaller boat is now buying a bigger one. The exchange is always for a larger size,” she says.

According to her, the owner of a 70-foot yacht pays around R$180,000 a year to leave it at one of the network’s marinas, whose occupancy rate has skyrocketed in recent years. “We opened a marina in Paraty in the middle of the pandemic and it is already completely full.”

The explanation for the heating of this market comes from the pandemic, which shook the nautical sector in several ways. Having an abode above the waters to isolate oneself and, at the same time, being able to move around with it was a good advantage.

Also, with the restrictions on international travel, many people with extra money have started to consider the idea of ​​​​their own yacht.

“Instead of spending in New York, they spent buying a boat to travel around Ubatuba”, says Ernani Paciornik, president of Grupo Náutica, responsible for the BoatShow event.

Caputo, from Azimut, assesses that the health crisis brought a “sense of urgency” to those people who had the financial conditions to buy a luxury good, but postponed the decision —which helps to explain the number of first-timers in this market .

These factors led the sector to experience a boom. Demand was so great that, in 2020, the sector grew by 25% compared to the previous year, according to Acobar.

In 2021, there was another 20% growth. That year, 3,500 boats were produced in the country and the sector’s revenue was R$ 2 billion. For 2022, the year in which the data have not yet been closed, the expectation is for growth of 25%.

The small reduction in growth in 2021 was not due to a lack of orders, but of parts to make new boats. With the high demand, the sector had to rush to adapt.

“The pandemic was the pinnacle of the nautical market. Sales were up there, shipyards zeroed out on prompt delivery, the waiting list went up to a year”, comments Luciane Pereira, commercial manager at Kamell, a parts wholesaler.

“It wasn’t you who chose the boat, the boat chose you, because that was what was on the market”, he jokes.

Scarcity generated unusual situations. At events, the models on display were not for sale: they were borrowed by customers to complete the showrooms. Luciane remembers the case of a buyer whose yacht was almost ready, but had to wait months for the door handles to be delivered to complete the assembly.

Some shipyards created second and third shifts to handle the demand. And to overcome the lack of parts, one option was to transform service boats into yachts, taking advantage of the hull and structure and changing the upper part.

In the midst of this, the used market soared. “There was a customer who had a 50-foot boat that was worth R$ 1.5 million and went on to be worth R$ 3 million. But he didn’t want to sell it, and preferred to renovate it”, says Marco do Carmo, director of the Yacht store Collection.

However, as the pandemic grows further away, the sector is starting to feel a cold wind coming. “In a little while, prices begin to fall. A lot of people sometimes need to sell their boat and lower the price. The tendency is to return to values ​​that are a little more feasible”, projects Carmo.

For 2023, the nautical sector started the year with an eye on the movements of the new government. A possible general drop in interest rates would facilitate financing for new boats. There are also doubts whether tax benefits will be maintained.

In March 2022, the government of former President Jair Bolsonaro zeroed import tariffs for personal watercraft. In addition, yachts —like boats in general— are exempt from property taxes, such as IPVA, something that may be revised in the event of a possible tax reform that seeks to charge more taxes on luxury goods.

In 2007, the STF vetoed the collection of IPVA on airplanes and boats, as it understands that the rate applies only to land-based equipment. Since then, there have been attempts to create a new tax to cover other types of vehicles.

One of them, PLP 11/2021, presented in the Chamber of Deputies, proposes to create the Ipae (Tax on ownership of aircraft and vessels), which would charge 1% of the market value of vehicles, annually. The text is under analysis by the Finance Committee.

“We propose a solution for this huge distortion in taxation, where owners of popular cars pay the IPVA annually and owners of jets and yachts are relieved”, defended the then deputy Severino Pessoa (MDB-AL), in the justification of the project. He was not re-elected in 2022.

For the coming years, the sector will also expand its focus on foreign waters. “A very large window opened for exports. There were no boats on the international market, and the Brazilian shipyards were prepared. There began to be a lot of exports to Turkey, Dubai, other countries in South America, the American market opened up”, points out Luciane .

The manager estimates that, among the shipyards she serves, 70% of production is being exported. “They are investing heavily in this. The dollar rose and that was excellent for manufacturers.” In 2021, the sector sold US$ 120 million in products abroad.

“The market has ups and downs, but it has been growing from 5% to 10% a year in recent years”, says Carmo, from the Yacht Collection. He assesses that customer behavior has been changing, because people are using vehicles more than before.

“A while ago, the status, the brand, spoke very loudly in the purchase decision. Today, the customer is going more in the product that will serve him, such as number of suites, internal space and autonomy”, he evaluates. “Whenever there is a very big crisis, people rethink their lives and start investing in themselves.”