Is now the time to buy a superyacht?
Martin Redmayne ruminates on this question, while identifying a new source of objective advice…
I’ve been pondering this question for the past couple of years, “Why buy a superyacht?”…and I’ve come up with so many answers, reasons and ideas behind the decision to actually own a yacht rather than borrow, charter or be invited on board.
If you consider the options and opportunities, there is such a broad spectrum of inventory available to buy, that I think it must be quite difficult to identify what makes sense or what type of yacht will ‘tick your boxes’. So perhaps we need to start with defining the market size and scope, as well as the simple question, ‘What will you do with it?’
In my opinion, a superyacht is typically over 30m in length, some say 24m due to the regulatory framework, but for the interests of our analysis, we are going to stick with 30m l.o.a. If you look closely at the market matrix and start to break the market down into segments we suddenly create niches within niches. 30m – 40m /40m – 50m / 50m – 60m / 60m –70m / 70m - 90m & 90m-plus, are the typical segments we like to focus on, in order to define the scale and scope of the market. We then take this to another level and break this down into even smaller segments like age, geography of builder, hull type, motor or sail and even more granular metrics, like range and speed. Then we can bring price and operating costs into the equation, and when all of these parameters are put on the table, perhaps this is what confuses the market and makes it difficult to understand what’s really on offer. Maybe then, clients decide it’s much easier to stick to what they know and enjoy all the other holiday or lifestyle investment options available, that are so much more transparent and easier to understand.
So, let’s go back to the question, “Why buy a superyacht?” and think about the reasons not to buy. These include fear of the unknown, lack of understanding of where to start, image and reputation of the market, cost of ownership and depreciation, headaches from crew and operational issues, and the complexity of ownership and tax structures - not to mention the image of the sea and its ability to scare those who do not understand or respect it.
Let’s consider this fact, over the past 25 years we have built c. 4,000 superyachts for a myriad of clients, some of which have loved them since the day they were delivered and others have loathed the day they stepped on board. Many have traded or speculated and upgraded to bigger and better things, many have enjoyed a rare journey for a few years and then decided to go and do something else. But if we look closely at the performance of the industry and the volume growth of yachts and the increase in tonnage, it is fair to say we have made a market, and it is highly unlikely that it will ever go away. I think superyachts are here to stay.
If that’s the case, and we all know that the number of UHNWIs is increasing and superyachting has increased its profile across the wider media, the time is right to refocus our attention on why anyone who can afford one, should buy a superyacht.
Hypothetically, let’s say you’re a client and you have $50,000,000 that you’re desperate to spend and invest in the superyacht experience and lifestyle. Where do you start, and more importantly, how do you start? So, it all goes back to the other question I asked, “What will you do with it?” The list of options again, is so broad that the decision-making process can be overwhelming. Will you explore, create a floating villa, want lots of toys, watch movies on board in a private cinema, anchor off your existing villa, globetrot the oceans, do business on board, throw lavish parties or just chill with your closest network? I think the myriad of inventory available, when combined with the individual needs and desires of a potential client, can create a decision-making process that leads to no decision being made.
So, here you are with your $50,000,000 and a marketplace that offers to hold your hand and show you what’s on offer, virtually and physically. Put yourselves in the buyer’s shoes and think about the process. There are literally thousands of individuals who can afford to drop $50,000,000 into the ocean but we ask ourselves ‘why don’t they?’, when we all think and constantly say, it’s the best thing money can buy.
There is no investment strategy, it’s sometimes hard to convince your investment team or family that it makes sense, the family office doesn’t understand and will always say ‘we can make that money grow for you’, and perhaps more importantly, customers with this sort of money hate making mistakes or looking stupid, by making the wrong decision. Therefore, any client who is currently considering or thinking about dipping their toes into the water off a teak swim platform, needs some help. And there are thousands of ‘experts’ and consultants who can hold that hand and get them into a yacht overnight. I recall one such ‘expert’ explaining that his job was to get the client to buy any yacht as quickly as possible, so they don’t lose interest or get distracted or confused. Perhaps this is part of the problem and is where clients and customers can find themselves sitting in their office, thinking why did I buy that superyacht, I hardly ever use it and it’s always costing more money than I planned to spend.
Rather than ramble on about problems, costs and reasons not to buy, I want to challenge the market to think about every reason that any of their clients have shared with them, why they bought a superyacht. I want the market to think about the reasons they would give any client to spend the $50,000,000 on a superyacht. We have encountered a global pandemic and some very interesting market conditions, not to mention some unique financial market performance, but there is one thing we all have to recognise and focus on - the number of ultra-wealthy individuals is still increasing. Therefore, our industry’s future depends on a rebuilding of customer confidence and delivering a clear explanation that owning a superyacht is okay, provides the most incredible experience and is worth all the money you spend on this floating asset. Again, I reinforce as per a recent interview I gave, the time has come for the industry to stop saying “no-one needs a superyacht” and to start saying “everyone who can afford one, should buy one” as it is the most amazing platform on which to do anything you like, in absolute privacy with whomever you like, wherever you like. There is nothing on the planet, to compare with owning a personal, bespoke, private superyacht that gives you the freedom to choose where you want to be.
So, in my closing argument, this pandemic has meant that the majority of the population have had time to think and reflect, and consider their lifestyle and mortality. And perhaps you have come to the conclusion that you only live once, and no matter how much money you have, you can’t take it with you. So, if you have $5,000,000, $50,000,000 or $500,000,000 in what I call ‘excess funds’, as long as you ask the right questions and think about what you’re going to do with it, this is the time that anyone who can, should explore the market and seriously think about buying a superyacht. You never know, you might enjoy the ocean, the freedom and the idea of one day upgrading to something bigger, better or built just for you.
In September 2020, we will be publishing The Superyacht Buyer Report, a detailed analysis of the various market segments, including the performance of shipyards, yacht types, sales activity and performance and a close look at how brokers add value and deliver results, coupled with a series of expert columns and advisories on the complete buyer journey, with questions to ask and things to think about. We are confident that this special report will be required reading for any buyer, owner advisor or family office who wants to understand the market and want to enter the buying process with clarity and confidence.
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