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Sep 2005

Article selected from our quarterly magazine dedicated to the largest and most luxurious boats with information, interviews, technical articles, images and yachting news



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Article by
Tommaso Nastasi

Update and forecast
An updating of the article published in the 505 issue (May 2004)

It is a known fact that high net worth individuals (people with financial assets in excess of one million dollars) make up the main customer profile for luxury yachts. But what is certainly amazing is that their numbers continue to increase.

According to the latest international surveys, the overall number of super rich people amounts to 8.3 million, of which 600 thousand are new entries into the exclusive international Eden of the super-millionaires.

This trend has led to an evolution in the pyramid of the high net worth individual family, brought about by the consolidation of a category of individuals known as Mid Tier Millionaires - people with financial assets between 5 and 10 million US dollars - an elite of no less than 745 thousand members worldwide. Precisely this "consumer" group offers a highly attractive customer profile for large luxury yachts, meaning vessels of up to 100 feet in length. In the course of the current sailing year the 80-99 foot segment showed the best market performance (+ 42%).

In analysing the overall picture of luxury yacht demand it is important to distinguish the effective and the potential demand.

The effective demand is represented by the number of high net worth individuals who are already luxury yacht owners (it is estimated at worldwide level that these are only one in three, estimated datum by forming the hypothesis that an individual is the owner of only one luxury yacht). The potential demand consists of the number of high net worth individuals who do not own a luxury yacht. Within this category we may distinguish those who do not like the sea and therefore yachting; those who love the sea but have not yet bought a yacht because they believe they don't have enough free time and, lastly, the so-called indifferent. Sea lovers who feel they have insufficient time, and the indifferent ones, are an interesting potential target for shipyards because, stimulated and made suitably aware by specific marketing strategies, they might change their minds and respond more favourably, which is to say by purchasing.

Figure 1 - Trend of number of HNWI classified by the main geographical areas
(values expressed in millions)

Source: Own processing of ML-CGEY data

But as always, in order to evaluate the luxury yacht market potential, it is fundamental to consider two highly important variables: the number of millionaires and their wealth.


During 2004 the number of super millionaires increased by almost 8%, reaching the record number of 8.3 million individuals (see figure 1). At worldwide level, the greatest number of high net worth individuals are concentrated in North America and Europe. Considered together they make up 64% of the whole worldwide figure. It is important to point out that the degree of concentration in North America and Europe has fallen by 1% since 2003, while in the Asia-Pacific zone the geographical concentration of HNWI has risen by 1% annually over the last three years.

In particular, in 2004 the overall number of super rich in North America amounted to 2.7 million whereas in Europe there were 2.6 million. These figures show how in terms of numbers North America, from 2002 to the present, had a more than proportional growth in comparison with Europe. In fact though the latter had 2.5 million millionaires in 2002 as against North America's 2.2 million, in 2003 both continents were substantially equal with 2.5 million individuals each, prior to North America taking the numerical lead in 2004.

Figure 2 - Trend of number of HNWI with related breakdown (values expressed in millions)

Source: Own processing of ML-CGEY data

Over the last 8 years the overall number of high net worth individuals has risen from 5.2 million to 8.3 million, an overall variation of almost 60% (see figure 2). In terms of breakdown of the different wealth profiles it should be noted that in recent years there has been no tendency towards change in the percentage proportions among the various profiles of HNWI, confirming the fact that the positive evolutionary trend of the number of super rich concerns the entire family of reference.

Figure 3 - Trend of number of HNWI, MID-TIER M, U-HNWI (values expressed in thousands)

Source: Own processing of ML-CGEY data

Over the past year, ultra-high net worth individuals (financial assets in excess of 30 million dollars) evinced the greatest variation, + 10.7%, followed by Mid-Tier Millionaires with + 7.9% and high net worth individuals (financial assets between 1 and 5 million dollars) with + 7.8% (see figure 3).

Numerically, only the ultra-high net worth individuals have increased, by almost 18 thousand people, so it is no surprise that they represent the main target clientele for extra-luxury superyachts.

Let's try drawing up a classification

If we want to draw up a sort of classification, the places with the greatest rate of variation are the Middle East (+ 50%) with 300 thousand millionaires, and Asia Pacific (+ 10%) with 2.3 million.

Figure 4 - Greatest variation rates in number of HNWI (thousands) at worldwide level

Source: Own processing of ML-CGEY data

In terms of international ranking, the countries where the number of millionaires has chiefly grown (see figure 4) are: Singapore (+22.4%) with 49 thousand; South Africa (+21.6%) with 37 thousand and Hong Kong (+18.8%) with 67 thousand.

In Europe the greatest variations have taken place in the United Kingdom (+ 9%), with 418 thousand, and in Spain (+8.7%) with 141 thousand.

In spite of a slowing down of the national economy there have also been positive variations in Italy where the super rich now stand at 195 thousand, with a growth rate of +3.7% in comparison with 2003. It should however be noted that the growth rhythms of our country are below the European average, probably due to uncertainties about the political situation and the difficulties in carrying out incisive reforms.

The wealth of HNWI

But we cannot speak about HNWI without mentioning their wealth.

Figure 5 - Trend of wealth of HNWI classified by the main geographical areas
(values expressed in trillions of dollars)

Source: Own processing of ML-CGEY data

As shown in figure 5, which represents the historical trend (and the forecast for financial year 2009) of overall wealth classified by the main geographical areas, the entire wealth of the whole cluster in 2004 amounted to 30.8 trillion dollars!

During the last year the overall wealth of high net worth individuals grew more than the overall number of the whole reference cluster, showing a variation rate of 8.10% (the best result in the last 3 years).

Excluding Europe with its +3.5 %, all the main countries experienced variation rates above world datum.

In particular, the simultaneous growth of GDP and the capitalisation of markets at international level favoured the generation of wealth for super millionaires.

It is important to underline that the greater overall growth (in terms of wealth and numbers) of North America as against Europe is explained by the greater tax benefits envisaged by the former's latest economic reforms and by the less than brilliant macroeconomic conditions prevailing in some of the main European countries.

Potentialities of the luxury yacht sector

These results reveal an increasingly wider potential market for luxury yachts. This notwithstanding, it should be pointed out that passage from the potential to the effective market dimension is not automatic since the widened competitive contexts are not static.

In other words, growth of the luxury yacht business does not simply need a potential market dimension (represented by the number and pro capita wealth of super millionaires in a given country) but also requires companies that are increasingly market oriented, capable not only of increasing the appeal of the luxury yacht within the market context of top range products but also of increasing end-user awareness through appropriate actions of professional marketing.