Enticing Australia by Jake Kavanagh Superyacht Business Magazine April 2013

Buoyed up by a thriving economy, and living in a cruising paradise, Australians are buying and chartering superyachts in ever increasing numbers, although the strong dollar continues to hit new builds.

“We’re going great,” enthused Captain Richard Morris, CEO of Australian Superyachts, when SB asked him about the current situation ‘down under’.

“A lot of that is to do with our economy. Just 10 years ago our Australian dollar was trading at AUS$1 to US$ 0.55. Now it’s more than parity. This is giving Australians a great deal of buying power, and we’re seeing the biggest growth in yacht ownership. Obviously, the strong dollar is working against our own new build yards, and the refit sector to some extent, but on the other hand we’ve just had our best charter season ever.”

When we last reported on Australia in depth in December 2009, the global financial crisis (GFC) was beginning to bite. Nearly all the new build yards bar one were short of orders, and the big buzzword was ‘diversify’. One luxury builder even switched to fitting out camper vans to keep its craftsmen busy. Since then, one of those new build yards, Azzura, has ceased trading, and most of the others are either waiting for new contracts, downsizing to smaller craft, or concentrating on the commercial and refit side of their operations. Only Hanseatic, based on the west coast, currently has an order in build, although the company declined to take part in our round up until it had some breaking news to share. The others remain ‘superyacht capable’ but the strong AUS$ is making brokerage yachts and new builds from overseas particularly attractive to Australian buyers.

“Looking out of my office in Sydney Superyacht Marina, I can see five 40 – 52 metre superyachts berthed nearby,” Morris said. “They’re all flying the Australian flag.”

Whilst the economic boom has damaged Australia’s domestic yards, business is picking up in other sectors. Australia’s regional superyacht hubs have greatly enhanced and consolidated their refit and service infrastructure, and a strong campaign is underway to attract owners to not only cruise Australian waters, but also to take advantage of the refit facilities whilst there.

Crew freedom

A big incentive came in 2008 with the relaxation of the rules for foreign crews, allowing them to arrive in Australia and stay with their yachts on charter under the new 488 Visa. “This made a big difference”explained Cairns Superyacht Group. “The year after the 488 went live, we had 40 superyachts arrive here at Cairns, which is a ‘Section 15’ official port of entry. This was a huge rise on previous figures. The GFC knocked those figures back a bit, but over the last two years they have been steadily building again. Last year we had 35 superyachts arrive for an extended stay, and this year we’ve had five big yachts in already.”

Part of the attraction of Australia, apart from some beautiful seascapes, stunning diving and a remarkably diverse interior, is the support system that awaits visiting captains.

Tempting them to make the considerable trip is an initiative called ‘The Great Southern Route,’ a complete guide to visiting Australia and the brainchild of Master Mariner Captain Richard Morris. “Crews love it here. We’re like an English version of America.”

Morris concedes that prices have gone up for essential works. “Nowadays, we’re not as cheap as we used to be, but we’re still competitive, and of course the work is all class approved. A top technician costs around AUS$100 an hour, and our facilities are second to none. The government has given a great deal of support to the commercial, fishing and military fleets, so the marine infrastructure we have is superb. The strong dollar may tempt some owners to go for a major refit in other areas of the Pacific,” Morris said, “but they will still get excellent value, top quality and work to deadline right here in Australia.” Another burgeoning market is charter, especially on the East Coast. “We can’t get enough superyachts at peak times,” Morris said. “During the 2013 New Year celebrations, yachts were chartering for AUS$20,000 an hour.” However, importing a yacht for chartering has tax implications, something the recently reformed trade body Superyacht Australia aims to redress. They’ve had some success, as the Treasury has recently announced a review of the rules.

“This is great news,” CEO MaryAnne Edwards stated. “Australia needs to remove this impediment to the growth of the superyacht sector.”

The pressure is on Australia from other destinations nearby, such as Fiji and Tahiti, which have both relaxed the tax burden on visiting superyachts. This move has already had very positive results, and placed Australia in a good position to capture the increasing traffic. Superyacht Australia estimates that if the restrictions are lifted, the number of visiting yachts would double in two years, and the support industry would also be given a shot in the arm. There are over 5,000 superyachts in the world, but the trade body says that Australia sees less than 2 per cent of them, so the opportunities to grow this sector are huge.

“Currently, owners wishing to charter must fully import their vessel and pay any duty and GST applicable,” Edwards said. “Given the costs of this taxation versus what they would receive in charter revenue, this equation simply does not stack up. However, if the regulations were relaxed more yachts would come here, and the government would benefit hugely from the GST payable on charters and purchases. This is our number one priority, and we will continue until we get an outcome”

Meanwhile, with an eye firmly on attracting Asian owned vessels, the number of superyacht berths is gradually being increased at key ports around the 35,876km (22,000ml) of mainland coastline.

West Coast charter

“We’re seeing a lot more charter out of the west coast now, especially Broome.” said Superyacht WA regional cluster. This area has enjoyed strong growth in its economy off the back of the mining and offshore industries. “There is some fantastic cruising here, and near Exmouth we have one of the top 10 diving sites in the world. The coast of Kimberley is particularly spectacular. We can also offer large berths in Freemantle, where we can take six superyachts, and the water in the outer harbour was deep enough to take the sailing superyacht Eos last year. We’ve also got an expansion of berths in Broom, Exmouth and Pilbara.”

The message from Australia is upbeat and positive, especially for overseas builders wishing to sell their yachts into the domestic market, and for those who want to charter them whilst there, especially if the 10 per cent GST is lifted. Meanwhile, the campaign to attract more visits continues to gain momentum. “The future for us is bright,” said a cheerful Morris. “In fact, it’s so bright, we’re all having to wear shades!”

Sydney & Newcastle

Sydney is the capital of New South Wales, Australia’s most populous state, and the country’s most iconic city. The superyacht infrastructure was founded during the 2000 Olympics, when 45 superyachts visited the games and were berthed in temporary moorings.

Building on that momentum, the ‘Superyacht Sydney Alliance’ was established in 2001. Since then, and with the help of the state government, an industry cluster has expanded and flourished, hosting an average of 50 visiting superyachts a year and offering a complete range of refit, berthing and management services.

“Visiting superyachts are discovering that there is more to Sydney than just being the world’s greatest harbour,” explains the cluster’s President, Captain Richard Morris. “They find that a vibrant support network exists to provide them with the maintenance and service support they need to make their visit a total success.”

Plans are underway to further expand the superyacht facilities within the waters of Sydney Harbour, specifically to attract more yachts from Asia for cruising and refitting in the area. Meanwhile, the former shipbuilding region of Newcastle, around 120 miles to the north, is able to offer deep water berths, new build facilities, large ship lifts, and a 10,000t floating dock.

AUSTRALIAN SUPERYACHTS

If you’re considering chartering your yacht, Australian Superyachts offers a full management package with a range of in-house industries. The company is heavily networked, and can assist owners, captains and crews to source goods or services, and negotiate any regulations required for a successful cruise.

With thanks to Jake Kavanagh, www.SUPERYACHTBUSINESS.net