Superyacht market shrugs off loss of Russian buyers

Happy yacht sellers.
Photo: Ray Tang/Anadolu Agency/Getty Images

2022 Palm Beach International Boat Show kicks off this weekend in Florida with all the glitz you’d expect: $1.2 billion worth of ships shimmering along the Inland Waterway, a VIP pavilion with open bar, and a contemporary art fair that accompanies it. What you won’t have is many clients from the country that until recently was the world’s second largest market for high-end yachts. Russia, which according to market watchers has accounted for 9 percent of the total super yacht markethas been abruptly sidelined by the west unprecedented economic sanctions about him invasion of ukraine. You would never know from the way the yacht market is booming.

“2022 has started off extremely well and we have seen strong sales activity across the board, which we hope will continue,” says Richard Lambert, head of sales at yacht brokerage firm Burgess, which has sold more than $2 billion worth of yachts. last year.

Apparently losing a tenth of your customer base is not a big deal when the market is red hot. For one thing, the kind of person who might buy a superyacht, often defined as any personal-use vessel over 131 feet in length, abounds these days. Although the COVID pandemic triggered a world recessionsaw the number of billionaires in the world increase from 2,095 to 2,755 and your accumulated wealth increases by 60 percent, or $5 billion.

If the sudden demise of Russian yacht buyers does finally have an effect, it may only be at the higher end of the market. “Customers from Russia and the Middle East have a larger average yacht length,” says Merijn de Waard, founder and director of superyacht schedules. “They are more interested in the very large ships.” According to the publication’s statistics, the average Russian-owned superyacht is 200 feet long, compared to 177 feet for American-owned ones. Of the 13 superyachts that are over 140 meters in length (459 feet), nine are owned by Arab royalty and four of them are owned by Russians. Or maybe five. Italian authorities are currently holding the 459-foot Scheherazade in a small port on the Tuscan coast. The owner could be the richest Russian of all, Vladimir Putin — no one is completely sure.

Boats built for this clientele they tend to have a decor style reminiscent of a Las Vegas high-roller suite, with amenities that would make a Roman emperor blush: helipads, glass-bottom infinity pools, outdoor fireplaces, hammams and Russian banyas, art interactive on video walls, 3-D theaters, speedboats, amphibious ATVs, giant slides, dive centers, ten-person submarines, and a garage for helicopters and ATVs.

The expense of owning such boats only begins with the purchase of the boat itself. Larger yachts are often joined by smaller superyachts to carry additional crew and equipment. Owners spend about 15 to 20 percent of the cost of the yacht to cover maintenance and personnel, which can be more than 80 crew members.

Unsurprisingly, yacht buyers from the land of the Fabergé egg would tend to fall on the glitzy end of the spectrum. If the idea of ​​a helicopter landing on your boat makes you think, But where will my other helicopters land?then you’ll appreciate the twin fore-and-aft helipads, like the one Russian state oil company president Igor Sechin has on his 445-foot yacht Growing. Feel like the underwater observation bubble of Aquatic life with Steve Zissou does it have to be something real? Fertilizer Baron Andrey Melnichenko 469ft Sailing yacht A currently the largest sail-assisted ship in the world, it has a cushion-lined capsule with panoramic, foot-thick glass windows set into its keel.

Safety is always a concern for those with a high net worth, bulletproof glass is a popular feature on high-end superyachts. To ward off prying eyes, Roman Abramovich’s $610 million Solaris it is equipped with a system that tracks unknown drones and another that automatically detects and disables digital cameras. For those worried things could get worse, a more custom option is an anti-aircraft missile system like the one rumored to be fitted to the 512-foot plane. dilbarowned by metals and mining oligarch Alisher Usmanov.

American yacht buyers aren’t known for that level of extravagance, but their market share is going strong. The leading nationality for superyacht purchases, Americans buy about a quarter of all those sold. “It’s the US customers that are driving the market,” de Waard says.

Another reason the market is so active is that it has recovered from a slowdown during the first year of the pandemic, when superyacht sales fell amid travel restrictions and general uncertainty. Sales then recovered considerably, leaving fewer used yachts available for purchase and leading to a backlog at major shipyards. If anything is holding back the superyacht market, it’s not a lack of customers but a lack of supply, says de Waard.

That could change if a portion of those seized Russian yachts were dumped on the market. But that’s not going to happen soon. For starters, the legal status of the seizures is murky. No country has yet taken formal possession of oligarchs yachts. “These are only asset freeze orders, i.e. holding assets until sanctions are lifted, rather than actual forfeitures,” wrote Martin Davies, director of the Center for Maritime Law at Tulane Law School, in an email. an email. “Under the laws of most countries (including the US), forfeiture can only take place if the owner of the assets is convicted of a criminal offence, which I don’t think is the case in relation to these oligarchs ”.

There is a paradox in the extraordinary extravagance of the largest superyachts. These ships are all about display and swagger, allowing the richest of the rich to not only flaunt their wealth, but also move it from scene to scene. And yet their owners are shrouded in layers of secrecy. Many hide their ownership through shell companies and require contractors and crew members who work on their yachts to sign confidentiality agreements. In part to remove these layers of secrecy, the US and other Western countries last week formed the Russian elites, proxies and oligarchs (REPO) working group to identify and freeze the assets of the oligarchs. The United States also began offering rewards up to $5 million for information leading to the seizure of illegal assets linked to the Russian government.

the Scheherazade is particularly mysterious. He rarely leaves his berth in Marina di Carrara, Italy, where his crew has installed a cover to hide his nameplate and a metal barrier along the pier to protect him from the spectators gaze. the research team led by imprisoned dissident Alexander Navalny was able to trace the identity of its crew and determined that many of them belonged to the Federal Protective Service, a Russian state agency tasked with protecting state assets and high-ranking personnel. And the yacht has twice sailed to the Russian Black Sea resort city of Sochi, one of Putin’s favorite haunts.

This combination of extravagance and secrecy is characteristic of other markets in which Russian oligarchs have sunk their wealth, such as real estate and art. Here, too, market pundits say Russia’s withdrawal has done little to dampen a tidal wave of money pouring in from the ever-growing global plutocracy.

Dolly Lenz, a high-end real estate broker in New York City, says her firm has been fielding calls from Russian clients looking to quietly get on the “rumor list” of deals that aren’t publicly available for sale. “They are preparing to pull the trigger. It’s like, ‘Yes, I’ll take whatever offers me the best offer,’” Lenz said. Fox Business News.

But this fledgling flight is doing nothing to cool the market. “Ultra-luxury is on fire,” says Manhattan real estate agent Alison Rogers. “The rich have gotten richer even during the pandemic and they have to put their money somewhere.”

The art market is also roaring. According to the online art market site artpricethe total value of art sold at auctions around the world last year was $17 billion, up 60 percent from 2020.

If there is a lesson in this, it is that while the world of luxury capitalism is extremely welcoming to the nouveaux riches and their billions of uncertain provenances, it is not particularly sentimental about their departure.

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