Even as the world’s equities markets have posted one of the worst performing years on record thus far and Americans battle with debt amid record inflation, one industry is still enjoying the fruits of a bull run: superyachts.
Much of the market is being bolstered by a U.S.-led segment of the markets, notable in the absence of the Russian Federation’s elite as the war in Ukraine escalates.
According to Oct. 6 reporting by Bloomberg, yacht company executives at the recent Monaco Yacht Show were abuzz with talk “of insatiable demand that intensified during the pandemic as the wealthy decided that a boat of one’s own was an ideal way to escape lockdowns and infection.”
The Show featured a “near-record 117 boats on display,” the outlet stated.
Bloomberg spoke with Jonathan Beckett CEO of Burgess, a company described as “one of the leading superyacht brokers,” who stated that even in 2022 where the most hysterical portion of the Coronavirus Disease 2019 (COVID-19) pseudo-pandemic tide has receded, business is still 20 percent better this year than last.
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Beckett explained that the worldwide shock from facing what appeared to be fatal disease may have had the positive effect of serving as something of a refresher course for the elite class on the brevity of human life.
“Our clients are all very wealthy; they’ve always felt sort of bulletproof and impenetrable and powerful…I think the one thing the pandemic did was make them feel vulnerable for the first time in their lives,” he said.
“They think, ‘life is actually fragile. I’m not immortal and I can afford to go off and do something really nice. Why don’t we do it now?’” Beckett added.
To prove this point, in February of this year, Bloomberg had already reported that 2020 saw a bumper year for the industry, a windfall sending sales 77 percent higher year over year and doubling 2019’s figures, pushing the industry into a supply-side shock.
The outlet explained how the now-sensitive topic of central bank monetary policy played a big role in the pump, “Low interest rates and bumper markets fueled $1 trillion in gains last year for the world’s 500 richest people, according to the Bloomberg index.”
Bloomberg referred to the low rates and “bumper markets” as “wealth creation” that caused “heightened demand for solitary recreation due to Covid-19” as fundamental causes to the trend.
CEO of YachtBuyer.com Kevin Bodington told the outlet that 2021 saw 1,001 superyachts sold at a total valuation of €9.4 billion. This year thus far, 567 have been sold for a total of €4.2 billion.
The trend is well established. In March of this year, magazine EliteTraveler cited a company named Fraser, described as a “superyacht broker and charter specialist” as characterizing 2021’s sales moon as “over 2.5 times their 12-year average.”
Of the aforementioned market, Fraser took home €1.5 billion in sales, which they said amounted to “triple their average sales for the last 12 years.”
The article stated that 2021 saw a major uptick in the sale of smaller yachts, which they attributed as an indication the market saw an influx of first-time buyers.
However, larger yachts also sold at a higher rate as buyers “look for yachts that can accommodate all the amenities needed to stay on board for extended amounts of time.”
But this lifestyle of the rich and famous may not be all it’s cracked up to be at first glance.
Based on a 2018 article published in CEO Today Magazine, author Captain Matthias Bosse explained that it’s a crowded world as the Mediterranean harbors 70 percent of all yacht traffic despite having only 4 percent of the world’s coastline.
Bosse explained, “Modern superyachts are mostly designed for coastal cruising and calm seas. They have limited range, and with increasingly sophisticated engineering requiring constant shore support services, their voyaging limitations are clear.”
The Captain added that the sailing season is also very short. So short that the average yacht is on the water for as little as five weeks each year.
Bosse added that, at the time, only 2.4 percent of those on Earth wealthy enough to own a superyacht actually do, perhaps in part because they cost greater than 10 times more per cubic meter to purchase than a luxury cruise ship.
But the pandemic’s shock certainly seemed to change habits.
EliteTraveler noted that not only did the number of charter bookings increase in 2021 by 25 percent, but that the average length of trip had extended by 20 percent in 2020 and 31 percent in 2021.
Moreover, based on search data from the yacht-enthusiast website Y.CO, interest from owners in traveling to remote destinations such as Antarctica had increased by 134 percent.
Curiosity about hitting up Alaska and Greenland had also increased by 47 and 33 percent respectively.
Bloomberg noted in its most recent article that the near total removal of Russia’s elite class from the marketplace after the war in Ukraine began has not put the damper on the market’s headwinds one may expect.
The reason, they say, is U.S. demand “accounted for the largest share of both the existing fleet and of new-builds.”
“US owners make up 23% of the global fleet of super-boats of more than 40 meters, followed by the Russians at about 9%. Other major buyers come from Greece, the UK, Turkey and Italy,” the article read.
Reporting by Forbes on the industry boom in May of 2021 confirm the supposition, “The U.S. accounted for 47% of the total number of yachts sold in Q1, followed by Europe with 41% of total sales.”
For Americans, yachting on the domestic seaside appeared to increase in appeal as well. “Popular stateside cruising grounds, such as New England and California’s coastline, saw upticks in sales and charter activity, likely due in part to pandemic lockdowns across most of Europe since March 2020,” the article read.
