Is now really the right time?
It used to be said that there was no right or wrong time to invest in a superyacht so long as you understood how much money you might lose.
The heady days of intense speculative investment in superyachts may well have come and almost, if not quite completely gone, but the yacht market today is seeing the greatest amount of sales activity since the present world economic crisis began.
Whether new buyers are moving up from chartering every year to buying their own yacht, or upgrading to a bigger yacht or simply taking advantage of medium to long term investments, deals are being done on yachts this year – 230 of them at the time of writing and counting.
So why have so many decided that now is the right time to buy?
1. HUGE REDUCTIONS
If over the years you have been interested in purchasing your own yacht but been put off by the initial level of investment required, then these should be the happiest days of your life. Never before have quality yachts been priced at such low levels…and for some, the Asking Prices are still dropping. This year alone we have counted over 500 price reductions ranging from EUR 200,000 per yacht to over EUR 15 million.
If it is only about the price…buy now. But do not buy alone. Work with a broker who can advise you on the quality and state of the yachts you may be interested in. That way you will avoid having to pay for any hidden “extras” further down the line such as unexpected maintenance bills.
2. INCREASED CHOICE
If the reason you have not purchased is that you have still to find the perfect yacht, now is the time to really go looking. With the sole exception of one or two months this year, more yachts have been coming up for sale on the market over the last 3 years than have been sold. There are some spectacular Feadships, Oceancos, Bagliettos, Royal Huismans, Palmer Johnsons and others now available for the very first time and at prices that could only have been dreamed of before.
If you have that perfect yacht in mind, there is more chance it exists out there today than ever before – so go looking. Or better still - get your broker to go looking for you. He will not only put together a selection of all the yachts that match your criteria, he will also be able to give you the inside track on others that are not yet advertised as being for sale. The insight he will be able to share with you on the state of the yachts you see will prove invaluable.
3. BUILDING YOUR OWN – BETTER PRICE, MORE EXTRAS
For the first 18 months after the fall of Lehman Brothers it was hard to recommend to any potential new buyer the option of building from scratch. The financial state of health of many shipbuilders was at best in question, at worst under intense scrutiny. Now time and experience has sifted out the best from the rest and for buyers that means better deals, more extras and increased after-sale guarantees from some of the biggest and best names in shipbuilding.
If finding the perfect yacht has been the only thing to hold you back, then not only has the cost of building dropped, but the best yards have worked hard over the last few years to put in place the most efficient procedures and processes ever – so you get the best yachts, at the best prices, on time. Make sure you work with an independent Project Manager (see recent article in The YPI Selection) on the build and appoint an experienced new-build broker to negotiate the best deals, terms and conditions with shipbuilders on your behalf.
4. SOLID MEDIUM TO LONG-TERM INVESTMENT
One of the world’s most renowned yachts, the MALTESE FALCON, was originally advertised for sale at over EUR 120 million. She eventually sold at a figure closer to EUR 60 million. This amazing Perini Navi is no less of a yacht as a result of the price change nor is she enjoying any less success or attention. Her new owner has by most accounts, invested in an asset that will, if it hasn’t already, appreciate well over the years to come. There will always be those who want the very best in yachting. The current over-supply of yachts will not last for ever. Older, more non-descript vessels will eventually disappear and the slowdown in new builds will eventually help the market find a new equilibrium and stability. That is when your investment will start to pay.
If you want to invest in an asset that you can enjoy as well as seeing some sort of return, you have more chance today of picking up your MALTESE FALCON than ever – and at a very competitive price. Work with a broker who can advise you on the potential of your yacht investment. Ask him how best to minimise the risks and costs of running that yacht whilst ensuring she remains in prime condition.
5. REDUCED RUNNING COSTS
For many, the real stumbling block to purchasing a yacht is not the initial purchase price but the grey area surrounding the question of how much it will cost to run. One benefit of the crisis for new owners is the attention that has been drawn to the whole area of operational efficiency within yachting. Today, management companies and captains are focused on helping owners reduce operating costs through increased technical and organisational efficiency thanks to software and know-how which, in many cases, has only been perfected over the last few years.
Don’t buy until you have spoken about running costs and operational costs not only with the captain of the yacht but with a neutral Yacht Manager. Some yachts are more efficient and cost effective to run than others, so make sure you have access to all relevant and accurate management information before making up your own mind on what yacht to buy.
6. INCREASED CHARTER POTENTIAL
It is often made out that the revenue generated by chartering your own yacht to charter guests will cover all a vessel’s running costs. The truth is that whilst it may, it rarely does and for most yachts that is an entirely unrealistic expectation. Chartering your yacht however can and does generate important revenue towards covering crew costs. It is an excellent way of keeping your crew and your yacht properly in shape and there are some important fiscal advantages to be enjoyed as well. Charter demand has been affected by the current crisis, however it is the lesser known yachts that have borne the brunt of the slump. An increased number of initiatives are now being taken by the industry as a whole to attract new clients to charter with many expecting to see the results of those actions as soon as the 2012 Mediterranean Season.
You don’t have to charter your yacht, but if you decide to do so there are certain requirements the yacht must satisfy. Ask your broker for advice, and speak to a specialist charter broker who can not only advise you on the potential your chosen yacht has for charter but also on the amount of revenue you could expect to generate.
7. YOUR OWN ENJOYMENT
Ultimately yachts should really be about one thing – your enjoyment of them. Yachts provide you with a privacy that is hard to find on land. They offer an exclusivity and comfort that allows you to spend the very best quality time with those you care for. They can take you to parts of the world many never even know exist. They open up a natural world that remains with you forever. They can go as fast or as slow as you desire so you can show off or remain as discreet as you wish. These are the joys yachts bring. For these reasons there will always be demand, there will always be innovation and there will always be yachting.
If you are an experienced charterer ready to make the move to owning your own yacht, our advice is do it and do it now BUT ONLY with the best advice and guidance you can find.
If, on the other hand, you are completely new to yachting, of course you can buy, but we might also suggest that you first charter as many different yachts in as many different destinations as possible. You will get a much better feel for the sort of yacht best suited to you and your tastes and in turn, you will save you a lot of time, money and ultimately, avoid future disappointment.
For more advice on any aspect of buying, selling, chartering or running a superyacht contact:
For general enquiries call: +377 99 99 97 97 or email email@example.com