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Lawyers and designers share some thoughts on how to own a superyacht in today’s

austerity climate without being embarrassed and some trends they have noted in the past year. Dynamic, established names remain at the top, writes Nick Jeffery

The superyacht »establishment« is being shaken up and challenged by younger owners but still the big industry names dominate, their[ds_preview] brand strength and sheer expertise winning. Some struggled to win orders nevertheless and Blohm + Voss Yachts being taken over by Lürssen is an example of an established name slipping. Camper & Nicholsons International has changed ownership – since its Rodriguez Group takeover in the noughties – more times than Donald Trump has changed his White House communications staff. Now with 50/50 Italian (Fincantieri) and Chinese (Lai Sun Development) ownership one can only imagine the dynamics in C&N board meetings. Its latest restructuring includes the appointment of Fabio Ermetto as CCO to reposition the brokerage firm as »not just a brokerage company«.

Burgess and Edmiston, both benefiting from strong, long-term leadership and marketing, give a snapshot of the brokerage market: »We are reasonably strong in the charter market and note some activity in the sales market«, says an unusually reserved Chairman Nick Edmiston, adding »Take a broker’s advice. We give sensible advice but not everybody is sensible enough to take it! There is a lot for sale in Italy, building ›on spec‹ but it is better to visit with a broker«, adding a quip, »to avoid being shafted while you are bending over your plate of pasta!« Edmiston recently sold the iconic 75m »Enigma« to a Monaco resident, built by Blohm + Voss as »Eco« a quarter century ago (this author was on the design team with Martin Francis) and now renamed »Zeus«. »A well-designed and -built boat that is well-maintained can retain its value« notes Edmiston.

Jonathan Beckett, CEO and owner of Burgess, is upbeat and was looking to match 2016’s best ever charter year when he spoke with HANSA early in the summer season, aboard the charter yacht »Andreas L«. He noted that Russian activity is picking up, albeit slowly, having been 75% down in Burgess’ Moscow office just a couple of years ago. With eleven new superyacht builds on the way and 20 in-house naval architects in its London office, Burgess remains solid. Real estate brokers could learn from the yachting industry to muscle in on the new build market. Broker fees are often a target for complaint, but the good ones do help to grow the market and they will adapt to the younger buyers’ demands through necessity. As C&N’s former Chairman George Nicholson said, »brokers look for the shortest and easiest route to their commission«. Talk of disruption is bandied about but nobody has managed it yet. Perhaps it will come from an unexpected direction such as self-proclaimed disruptor Hugh Wade-Jones of Enness International, who specialise in high-value mortgages, and who spoke at the Monaco Wealth Forum of how Enness cracked the mortgage market establishment and its funny handshakes… Their inaugural Monaco Summer Party, held at the new Thirty-Nine gymnasium-club, saw more superyacht owners present than at many brokers’ dos, including the new owner of »Eco«. Enness is looking to finance buyers in the superyacht market, having clients with large mortgages and large yachts.

Superyacht iQ gives some facts and figures in its last annual report: Global fleet (30m+): 4,473 yachts (84% motor, 16% sail). 91% of new orders are motor. At the end of 2015, 473 superyachts were in build, of which 169 are for sale (154 shipyard »spec« projects and 15 by owners). For yachts of above 40m, 22% are owned by USA clients, 10% Russian, while the order book (in-build) shows 21% USA and 20% Russian

The legal view

On the legal front, responses are forthright, Tony Allen of Hill Dickinson reporting »a difficult year to date, albeit with some significant new build activity at the top end of the market in the first half of the year and a sudden surge in sale and purchase in the mid-market in the past two months (May & June)«. Allen notes »increasing activity from the Far East, Middle East and US, with a bent towards explorer yachts«, noting it is »a tough market with everyone looking at ›new angles‹ more than ever«. He believes that if the »ongoing spate of macro and economic crises, and micro issues of French regulation and increasing charter regulation in the Med have not significantly disrupted the industry, it would be surprising if anything could!« He notes that »those factors are not helping and are causing everyone to ›think twice‹ and be less emotional about yachting acquisitions. Clarity on Brexit might help too.«

Clyde & Co’s John Leonida states »the trend is definitely one of consolidation – for all the looking back at the pre-2008 market exuberance, today we have fewer builders and fewer deliveries. There are probably a third less yards making deliveries today than there were in 2012 and the pattern continues. There will be further shakeouts before the new build industry has a period of calm.« Leonida agrees, »there is a core selection of builders with good pedigree, excellent reliability and first class customer service who are thriving in a smaller market. In a sense we have a smaller but healthier core new build industry – this, in our experience, is shown by a constant stream of new instructions to new builds, principally in the 70m mark and above. We have also seen an uptick in the ›previously owned‹ market, albeit sellers not achieving the advertised prices – but we are nowhere near the dramatic price reductions of 48 months ago«. He notes »owners are willing to be adventurous in their design choices – it is clear the explorer type yacht is no longer a fad and is very much here to stay. We see, like our colleagues, a paucity of the big sailing yachts but I note my clients are favouring smaller sailing yachts as a supplement to their bigger motor yachts. As a trend, perhaps reflecting the austerity in the broader economy, clients seem to be wanting simpler, more austere, and less ostentatious interiors«.

Jay Tooker of HFW states: »My gut feeling is that the market is not very strong at the moment. The Russians are not active; the Americans are not as active as they should be given the strength of the Dollar against the Euro. At HFW we have been very busy but I do not feel that is reflective of the market. Especially among the shipyards, we are fortunate to have strong clients at the core of the sector who will be among the last to be affected by a downturn. We have been picking up new work but I suspect a good amount of it is market share rather than genuinely new business. I don’t know where new growth in the sector will come from«. On trends, Tooker says it is not really a question for a lawyer but comments on what he sees crossing his desk: »Big explorer yachts seem to be the flavour of the month.«

Tooker believes »the industry could actually benefit from associating itself with other activities that rich people enjoy. The way forward must be to get yachts on the list of things that the rich do when they get to a certain level of wealth, alongside jets, houses, art etc. Getting on that list must be the first step in expanding interest in the product, then moving up the list the next step. The Superyacht Gallery event, in June at the Saatchi Gallery, was probably a missed opportunity – a dedicated yacht event like that will attract only a small proportion of those who were already interested in yachts but why not link it to say ›Masterpiece‹ or ›Frieze‹ and take a chance that some of the rich people who come to see art will be pleasantly surprised to encounter yachts?« Tooker points out that »at the top end of the market there is greater wealth than at any time in the past 100 years (read Thomas Picketty) and such desire as there is for yachts appears unaffected by most of the normal dampeners on activity, except perhaps embarrassment to be seen to be spending big and living it up while others are suffering and you’re sacking employees. That aside, if you’ve got the cash an economic downturn may even be a reason to buy a yacht – if there’s nothing to invest in and you’re only going to have to watch the value of something decline, why shouldn’t it be a yacht?«

Tooker believes that the Panama Papers and »The Philip Green situation« (see HANSA 9/2016) are indications of the biggest factor against yacht ownership. »Superyachts are big and spectacular and you can’t hide them in the way you once could. I don’t think the rich are going to change their attitudes and desires but they may want to do it more discreetly«. Mulder Shipyard – established in 1938 and now with a firm foothold in the 30 to 40m superyacht niche – even markets its new Mulder ThirtySix as a discreet »Intimate Family Yacht«. To-date its clients have opted for this size, for private use, even though they could afford much larger.

John Leonida echoes the ownership conundrum: »Millennials, and those influenced by them, are more interested in experiences than acquisition. In a way those who could respond to that through non-ownership superyacht experiences will no doubt profit. It is also true that there is a broader anti-capitalist populist political époque sweeping the world. It is anti-elitist and whether it is politically of the left or right the messages as to the accumulation of wealth by billionaires will inevitably make conspicuous consumption less attractive. It is no accident that when the Panama Papers were published hostile reporting on social media of hidden wealth and alleged tax evasion was invariably accompanied by pictures of superyachts – thus making the link between criminality and superyacht ownership. This is something which is locked in to the mainstream view of the accumulation of wealth.«

The design perspective

Oliver Stirling is concerned that larger design firms may be monopolising the smaller end of the market as well as large yachts as projects become fewer, noting it has become much more competitive to win projects and clients have been slow to commit to orders. He says that »the number of designers within the industry has grown enormously within the past ten years coinciding with a reduction in the number of new (yacht) jobs. Many interior and product design companies seem to be attracting ›spin-off‹ yacht projects from both new and existing clients (in the same way that yacht designers secure residential/aviation projects)«. Stirling also observes that exploration yachts continue to attract interest as a »go anywhere superyacht« as owners and charterers become more adventurous, escaping to more exotic »wilderness« destinations. »Small and large cruise ships may be monopolising this market and drawing away potential yacht charter guests seeking these experiences. The yacht industry could reverse this trend by providing large yachts with ice-class, competitively-priced charters to serve remote regions, perhaps in combination with multi-destination tour providers and/or hotel operators«.

Kokomo Island Fiji is a new destination to watch that will draw »superyacht people« to the South Pacific. Conceived by Australian property tycoon (and 58m Dubois-designed »Kokomo« sloop owner) Lang Walker, Kokomo Island Fiji arguably offers everything you get from a superyacht charter, including sailing using its water toys, as well as much more space to retreat from your fellow guests. Arrival is by seaplane.

Stirling also sees a trend towards secondary support vessels, as expedition yachts require submarines, helicopters, landing craft and large tenders, in turn needing more crew and space. »Two yachts may be cheaper to build than one«. Stirling believes »clients’ lifestyles are causing designers to challenge conventional layouts and develop new arrangements and spatial relationships« while »operational needs are evolving as some yachts are floating homes for escape and relaxation while others provide a platform for the excitement and adventure of research or exploration«. Stirling hopes designers will embrace advances in technology from other industries to ensure the environmental impact of yachts is minimised or eliminated. He agrees with the lawyers that polarity between rich and poor, not wanting to be seen to have too much wealth in these days of austerity, is affecting the market, which itself is overcrowded to the extent that popular locations are less attractive. Venice is considering capping tourist numbers. Will we see more marine parks limit visiting yachts? The purpose-built »Yersin« headed off from Monaco on a three-year exploration circumnavigation, with the support of Prince Albert II Foundation, and may make some recommendations.

Winch Design, rebranded from Andrew Winch Design, is one of the larger, established London design practices. Nick Brosnan and Ignacio Oliva-Velez, Head of Yachts, Interiors, say that trends are hard to predict, »especially when a project can span four years or more. What is trending now was designed a number of years ago and we are certainly not like fashion brands who have seasonal variation. What we can say is that clients are living on board far more and we have a number of new deliveries in the last 12-18 months where clients are spending the entire season on their yachts. This changes how we design«. Brosnan adds: »Clients are gearing more towards functionalism and this is especially seen with the desire to do more with their yachts and have more versatility, explorers filling this space«. Andreas Iseli, Head of Yachts, Exterior, says »we do have more requests for Axe bows and the younger clientele certainly seem to favour these right now«, agreeing with the explorer trend. Jimmy Carroll, Head of Marketing, states »70-80m is the new starting level whereas ten years ago clients would have wanted 50-60m. Slightly lower profiles and sleek lines are also part of the brief now«. Winch Design saw a shift in the market after anti-corruption measures in Russia and China. Carroll points out that social media helps the next generation of wealth »see where they can spend their money«.

Tony Dixon, of Redman Whiteley Dixon, sees a trend in yards looking to reduce build time, also noting more interest in Explorer yachts. RWD is keeping busy on several projects and believes »there is a lot of confidence out there in HNWI land!«, even with the global turmoil.

»Something never seen before«

Royal College of Art educated Ken Freivokh gives his personal view regarding the significance of »Black Pearl«: »What is significant is not, in my opinion, whether she is indeed very efficient, or that she embraces green technology – what is truly significant is that she is a mature and considered endorsement of the concept behind ›Maltese Falcon‹ – a concept designed to provide large superyachts with the ability to safely and efficiently sail, rather than just motor. However efficiently, and whether or not it includes technologies such as energy recovery or photovoltaic cells, motoring will never be as green or efficient as actually sailing – a technology which hopefully may be adopted by larger shipping, from container ships to tankers. What ›Maltese Falcon‹ has proven, and ›Black Pearl‹ is endorsing, is the feasibility and practicality of using easily controlled sails as the primary means of propulsion. It is possible, with minimum crew and minimum effort to deploy and efficiently and safely set sails, and indeed, to furl them away quickly and with great ease. To achieve that, and to do so with an elegant and graceful yacht is truly a landmark, a definite endorsement of a dream that deserved to be kept alive and developed further. That is ›Black Pearl‹’s greatest achievement.«

Of the smaller practices, Nigel Irens, known for his innovative multihull designs, sees a »Parallel World« (next to the perception of elderly owners on multi-storey yachts) emerging in which »young bloods who have a built-in passion for adventure want to get out there and live their dreams.« Irens is positive: »The good news for the superyacht industry is that in this new climate the dream starts when an owner commissions the build of something that has never been seen before. It is likely to be sleek, swift and long legged – capable of turning up anywhere in the world at short notice. It could be sail or power. The grand dining rooms will be swept away and replaced by outside cooking and eating for a few good friends. With today’s technology the ship will not need to be large to have big range and speed. The size will be determined by what space is needed for the abundance of sporting equipment aboard – which could include such essentials as boards of all sorts, beach cats, diving tenders – and maybe the odd submarine. It may not have escaped people’s notice that in the real world the bigger the boat the bigger the draft and the less access you have to the world’s secret hideaways… A skinny trimaran will do the job nicely…« He believes we should »build ships whose mission is to explore the world in a responsible way«.

For all the talk of trends towards explorer yachts, the 77.4m World Superyacht Award Winner »Legend«, the 7,640 nm-range Ice-Class explorer (ex »Giant«), offering up to 26 guests global exploration charters, is on the market at 46.5mill. € with Fraser Yachts, because »the owner wants to get out of yachting« for personal reasons. Nobiskrug’s 144m »A«, delivered in February, is given the usual industry put-downs – as is anything not fitting their idea of what yachts should look like. In fact, she may well be ahead of her time, offering some fuel savings through wind power and vast deck spaces – a true motor sailer, without the need for a large sailing crew. The 106m »Black Pearl«, just out of Oceanco, sports the Dyna-Rig and proves many who negatively criticised the innovative »Maltese Falcon« saying »there will never be another« as wrong.

Expect to see more environment-friendly, »different« explorer yachts, mono and multihull, with real naval architecture developments, launched in another five to ten years.


Nick Jeffery