The ownership chalice

Article published in the MYS Summer Magazine, #2017 | By Juliet Benning

 

Year after year, new yacht orders are not proportional to the financial growth of the world’s most wealthy individuals. By studying the path to ownership by the industry’s most loyal clients, we can better understand how to attract new superyacht buyers.

The world has no shortage of wealthy individuals, but when it comes to superyacht sales the maths do not add up. Relatively few UHNWIs are taking a bite of superyacht ownership, instead preferring to spread their assets across property, private jets, cars and art. In 2016, Wealth-X found that there were 2,397 billionaires worldwide with a total wealth of $7,400 billion. Yet the SuperYacht iQ found that new orders of superyachts over 30m amounted to 144 in 2016, 184 in 2015 and 159 in 2014. These numbers don’t seem proportional. Many believe that this low level of interest or commitment stems from a lack of understanding how to navigate the yachting industry.

In order to encourage new yacht ownership, it’s important to study the industry’s existing enthusiastic and passionate owners. Furthermore, the industry can only grow as fast as its berthing and shipyard capacity. What remains clear, however, is that the industry will continue to grow with a slow certainty – owners passing the passion onto their offspring and friends. These present owners are the industry’s greatest asset; ambassadors for a lifestyle so precious and unique that no other experience will come close. So how did these owners come to yachting and in what ways can we attract more?

One sector which continues to generate new owners is the art world. A resurgence of interest in art, particularly in Miami and San Francisco from technology billionaires, has meant that if you do your research, these assets are almost guaranteed to increase in value. Take, for example, Jean-Michel Basquiat’s Untitled (1982), sold last year by Christies for US$57.3 million (€52.1million) or Pablo Picasso’s Femme Assise (1909) sold for US$63.4 million by Sotheby’s. Stefano De Vivo, chief commercial officer at CRN explains that the art circuit is very much on the shipyard’s radar, “Many of our owners are art lovers and collectors usually attending Art Basel's three shows in Basel, Hong Kong and Miami Beach – for modern and contemporary art, as well as the Biennale di Venezia, which covers cinema, art, theatre and architecture.” Adam Papadakis, sales broker at Camper & Nicholsons corroborates saying, “Art Basel Miami is an event that triggers a significant rise in yacht buying enquiries.” The cultured yacht owner doesn’t stop at art, and events such as Monaco Grand Prix, the Cannes Film Festival and the America’s Cup have all triggered an interest in superyachts and ownership enquiries.

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Rewinding several decades before these glittering contemporary events, childhood is a place where the germinating seeds of yacht ownership are often planted. What also seems important is where an individual grew up and those living near the coast are more likely to catch the yachting bug. Joaquín Folch Sr, owner of Buka, a 36.8 metre Heesen motoryacht, grew up in a nautical environment on the Costa Brava, “My father was incredibly sporty, with a love of cars, planes, motorcycles and yachts. We completed our nautical degree at the same time and when he passed away in 1988 I inherited the 19 metre yacht he had bought with two more friends.” Similarly, Leon de Mercier, the owner of a 33 metre Gulf Craft yacht says, “I come from an Australian boating culture – that meant fishing and watersports with my grandfather and dad. It was only when I was a university student, aged 21, visiting the Southampton Boat Show, that it dawned on me the scale of larger yachts.” In the UAE, Bimal Bhatia, the owner of a smaller Gulf Craft yacht, watched Dubai Marina grow out of nothing and, anticipating the potential of yacht ownership, took one of the first berths available, later filling it with a small speed boat. Erwin Bamps, CEO of Gulf Craft, attributes waterside developments in the Middle East to an interest in yacht ownership, “The creation of multi-functional waterfront infrastructures and leisure marine destinations leads to faster and more sustainable growth of yachting communities.”

Many owners expect to hand down their passion for yachting, having shared quality “family time” onboard. “My sons will have Buka in August when she returns to the Balearics,” Folch says. This means we can expect a steady influx of new owners who have inherited the yachting passion. Referrals from friends also brings a high number of new owners: “Our current customers act as brand ambassadors, with word of mouth referrals being our single biggest source of new sales leads,” says Bamps. Papadakis prefers this way of meeting new clients, “The majority of my favourite and long-term clients come via recommendation of existing clients. A recommendation by an existing owner opens up a door that could have been closed for years and it brings so much more satisfaction because it is an indication of the owner’s happiness with his yacht.” Friends and business associates were responsible for Charles P. 'Buddy' Darby’s first superyacht experience, “It was a business-related trip way back in 1984 onboard Monkey Business, a 90 foot Broward motoryacht. My first social yachting experience was aboard Themus, a 156 foot Trinity motoryacht with friends for The Heritage golf tournament in Hilton Head, South Carolina,” Darby now owns the 47 metre Perini Navi sailing yacht, Andromeda la Dea.

Undoubtedly your reputation as a yacht builder is only as strong as your last client’s review. But the pathway to yacht ownership is very commonly made up of a series of yachts in ascending size. Leon Le Mercier’s journey began with an Azimut 105 with a much narrower beam than his current yacht, Joaquín Folch Sr’s first vessel was a15 metre speedboat and Buddy says that his family have always owned yachts. Once the aligned with a certain ship builder, this loyal clientele often become repeat customers. Heesen’s Sara Gioanola explains how important this is for the shipyard, “Many of our clients have built two or even three boats with us. For example, the owner of 37m Ilona later built 50m Sky. Similarly, the owner of Sibelle went from a 44m to a fully custom 50m yacht.” Yacht requirements grow in direct proportion to both family and fortune sizes. For those looking for a new potential client, Joaquín Folch Sr might be tempted to upgrade his Heesen, “As long as my physical and economic health holds out, I might consider upgrading Buka. I wouldn’t want to go any larger than 42 metres as this is already on the limit of my navigational license, but it would be good to get something more modern.”

Chartering is another obvious entry into yacht ownership that also gives the industry considerable media exposure through high profile or celebrity charter guests. In chartering a cross section of different yachts, a new owner will be better equipped to identify a yacht which suits their individual needs. Papadakis has observed, “There has been a great influx of ‘nouveau riche’ clientele into yacht chartering during the last four to five years. They’re very wealthy, educated and world-travelled people who had previously had very little or no exposure to yachting. A large percentage of which will eventually graduate into yacht ownership. I can see some exciting times ahead.” Geoff Moore of West Nautical has found that 80% of their yacht owners have chartered previously. Of course, most ownership “rights of passage” are facilitated by a trusted broker. Buddy Darby says of his, “Hank Halsted from Northrop & Johnson has been my go-to broker for years. He’s sold me almost every one of my boats.” Sara Gioanola reveals how Heesen’s broker relations are fostered through dedicated broker and client events which have been run for the past seven years, “70% of our clients come through brokers,” she says. Captains will also have a tremendous influence over which shipyard an owner may choose.

The Monaco Yacht Show is frequently used by new owners as a sounding board to compare a yacht they may have already selected for purchase. Yacht owners are enthusiastic and annual visitors to the MYS. Joaquín Folch Sr says, “I’m heavily involved in the Monaco Yacht Show and visit every year.” This year, with more of the show’s efforts going in finding and communicating with UHNWIs and their advisors, it’s certain there will be brand new clients just waiting to be initiated into superyachting. You can bet many of them, once committed, will be asking themselves why they didn’t do it sooner.