WITH two heli-deck platforms, a heli-hangar, its own submarine, and a spa, snow room, climbing wall and sea water pool among the features provided for its 24 guests, the 134-metre Serene is, in every sense, a super yacht. Bill Gates once chartered it for $5m a week.
Previously owned by billionaire Russian spirits tycoon Yuri Scheffler, it was the largest yacht to change hands last year, reportedly bought by its new Arab owner for around €350 million.
Ever since the financial crisis, there have been forecasts that the yachting ‘bubble’ was bound to burst. Surely a six-year trend of unabated growth, during which the sale of super yachts – defined as yachts of at least 24 metres in length – increased by an average 17% a year, could not continue against a backdrop of rising costs and growing geopolitical uncertainty?
At first glance, an authoritative market report by Yachting Partners International (YPI), one of the world’s leading brokers, seems to bear that out. 2015 was the first time in seven years that the number of yacht sales fell year-on-year, a 6% drop from the record-breaking 2014.
But scratch beneath the surface and a different picture emerges; looking at the seven-year trend, 2015 outperformed every other year, 2014 aside, for the number of completed sales. Not only that, but the total value of units sold increased to a record €3.4billion. The average yacht sold for €8.88million in 2015 – a 32% year-on-year increase.
So, the lure of a super yacht as status symbol for the super-rich is still as strong as ever. Another trend emerges from the report – the continuing growth of the charter market. There was a time when owners were reluctant to share their yachts with paying customers, but the charter industry is now generating more revenue and attracting more new clients than at any time since the financial crisis. The magnificent 72-metre Axioma, chartering exclusively through YPI for more than €550,000 per week and which has previously hosted the likes of Lewis Hamilton and Kendall Jenner, is already booked for the whole of this summer.
The total fleet of super yachts around the world is around 5,500-6,000, of which around one in four are available for charter. An industry rule of thumb is that annual operating costs will be somewhere between 7% and 10% of the yacht’s value so yacht ownership is a substantial on-going commitment, not just a one-off splurge. But the growing popularity of chartering isn’t solely explained by owners’ need to offset costs.
More Super Yacht Owners Will Charter
“For some owners, chartering their yacht is a great way of generating revenue to cover operational costs,” says Mark Duncan, YPI’s commercial director. “For others, it’s more about keeping the crew in good shape and the yacht in top condition. It also puts the yacht in the shop window. If it becomes popular as a charter yacht, that recognition factor and the opportunity of gaining some proven revenue can be an attractive proposition for any potential buyer should the yacht come up for sale.”
Chartering has opened up the super yacht industry to a new type of customer. One of its attractions is that you don’t need to know anything about yachts – the captain and crew will look after your every need, from preparing personalised menus to teaching you to jet ski – but, aside from the luxury lifestyle, the real advantage is being able to visit secret coves or private beaches that are otherwise impossible to reach.
This combination of discovery, escape and pampering has persuaded a growing number of customers to become owners. Contrary to popular belief, it’s not just Russian oligarchs and Middle Eastern sheikhs who are buying super yachts. One in three super yachts is owned by Americans and more than one in ten by Britons, according to a report by yacht management firm Camper and Nicholson and analysts Wealth-X. Russia is home to just 3% of all super yacht owners, fewer than Italy or Australia.
Many are seduced by the lure of the new, preferring to design their own yacht from scratch, though it can be a long wait to get hold of their shiny new toy. The build will take two or three years from the time the order is placed – or up to five years if it is a mega-boat. And new yachts depreciate quickly. On average, they lose 15 per cent of their value for the first two years and another 10 per cent for each of the next three years.
Buying Second-hand is Often Better Value
There are more than 2,000 pre-owned super yachts on sale and many offer excellent re-fit potential. With the money they have saved, owners can customize the yacht to suit their own tastes and still spend less than buying new – as long as they resist the temptation to re-design the boat completely.
Super Yachts are Getting Bigger
In the new-build market, the trend is for bigger boats. At last year’s Monaco Yacht Show, the industry’s showpiece event, the average length of the boats on show was 47 metres, compared to 32 metres when the event started back in 1991. Azzam, the world’s biggest super yacht – a mighty 180 metres – was built by Lurssen, one of the leading shipyards, for the Emir of Abu Dhabi at a reported cost of $400m. Marina Barcelona 92 specialises in refitting mega yachts of up to 125 metres at its 36,000 square metre-site.
Size matters, apparently, but it presents it own problems. Finding berths for these mega yachts is no easy matter. “In the 1970s if you owned a 120ft yacht it was a spaceship, now it’s standard,” says Peter Murray Kerr, creator of MooringSpot.com. “They are big beasts and yacht berths over 80ft are now in great demand, the Med is preparing for a rush on them”.
What’s the point of a mega yacht if you can’t flaunt it? But at the most popular Mediterranean destinations there simply aren’t enough berths; it’s impossible to rent one annually and the cost of securing a week’s berth at Porto Cervo or Port Vauban in Antibes is eye-watering. Berths for yachts of up to 60 metres in Monaco during this year’s Grand Prix cost up to €66,000.
And at St Tropez, originally a fishing harbour, it’s not unusual to see yachts waiting outside the marina, unable to get in. Getting your yacht into the right part of the marina is a sign of stature – no one wants to be consigned to the outer harbour wall, out of sight from quayside restaurants. The Adriatic is becoming an alternative destination for super yachts; Porto Montenegro has 450 berths and welcomes yachts of up to 250 metres.
Forty years ago the super yacht industry did not exist. Today, it generates €24 billion in revenue. Even in the face of economic instability and political uncertainty, don’t bet on a slowdown any time soon. ML