»Don’t mention the war!« seems to be the decision made amongst superyacht brokers with none of those polled by HANSA – on how Russia’s invasion of Ukraine has affected them – wishing to comment.[ds_preview] By Nick Jeffery
A cynic might speculate that cut-throat yacht brokers are secretly waiting to grab some of the ›elite‹ Russian clients of one Russian-owned, sanctioned »Kremlin-aligned* yacht brokerage« (*sanction report’s words, not the author’s!), headquartered in Monaco, whose spokesperson stated, victim-like: »…it appears that due to our success, we are unfortunately being targeted by those who would like to bring us down.« Lawyers for Russian oligarchs (also apparently victims) were reported as claiming it was »against UN Conventions« impounding their superyachts and »illegal and contrary to all international legal norms«, on one international boat industry web site. Nobody replied to a comment that suggested the (Russian) correspondent might ask the lawyers whether they felt the invasion of Ukraine was against UN Conventions or whether Russian superyacht owners and their lawyers believed the bombing and killing of civilians of Ukraine is illegal and contrary to all international legal norms. Foreign Policy reported in July that President Putin stated that he is fighting a war of »Imperialist Conquest«.
Designer Martin Francis – who is presently mainly working on cruise ship designs and land-based architecture projects and is never one to hold back on criticism – speaks out boldly: »business-wise, I’ve not been affected at all but, personally, I feel profound shock and outrage at the lack of reaction, supporting Ukraine, by the yachting community«.
»Putin’s war« will, of course, continue to cause turmoil worldwide, far beyond Ukraine’s borders. The superyacht industry, despite »robust« sales and charter markets, is taking a hit not only from negative media coverage in the popular press about some of the more ostentatious superyachts and associated shananigans, but also due to basic raw materials supply chains issues and increasing costs for shipyards. Builders, refit yards and managers were less reticent to speak out than brokers.
Vitters’ Bas Peute points out: »Russia’s invasion has the biggest impact on our cost prices. Energy and raw material prices are going through the roof. This has impact on our financial results for the projects we have on hand and on our cost calculation for potential new-build projects. More and more suppliers use a very short validity time on quotations for parts. Some are so short that the quote has already expired before we are able to finish our cost calculation! Next to the prices, availability is another area of concern. With the long lead-times of our projects we should be able to plan our purchases well in advance but we still need to rely on the performance of our suppliers.« Arrow Yachts’ Yerin Hobson confirms this: »We are lucky enough not be effected directly with the Russian Invasion yet. However, with 400+ linear metres that we currently have under build management, we are seeing builders start to experience supply issues, along with drastic price increases for some materials and components«.
Nikos Dafnias, of Alpha Marine (who recently designed a 47-metre diesel-electric superyacht, »The First«, newly building in Greece), states: »The increase of energy cost (gas, diesel and electric power) had begun before the invasion of Russia into Ukraine. The situation grew worse after this assault. I cannot appraise the calibre of Europe’s counter-measures on the Russian economy, but I can say without a doubt that these measures had a huge effect on Europe: disproportionate increases in energy costs, in all materials and equipment, shortage of materials and increase of delivery times are the consequences that Europe has to face. The uncertainty for the future sets its own imprint on the psychology of all parties involved, including yacht owners. Certain market opportunist factions rushed to feast on the situation and attain excessive profits; this practice intensified the atmosphere of instability already prevailing in the market. The punitive measures imposed on these so-called ‘Russian oligarchs’ – many of whom are actual or prospective superyacht owners – also caused upheaval in the European yacht market and definitely had an adverse effect on it.«
Dean Smith, Founder and Director of Hampshire Marine, points out: »Since Russia’s invasion, we have had to stop supplying services to any yachts connected with sanctioned assets which of course will affect us as it has other service providers. The extension of the EU sanctions to include supply of marine equipment to Russian connected vessels has further affected service and supply companies in our sector. Fortunately the industry remains buoyant with plenty of activity in the fleet so it is simply a case of shifting one’s focus of effort and priority for the near future”. Giulio Maresca, General Manager of Palumbo Refit, Marseille, notes: »The sanctions against Russia have not affected us directly, as we have seen in other yards. We have nevertheless felt the effects of the conflicts in terms of the supply of raw materials as well as finished products regarding prices and delay.« Meanwhile Maresca’s colleague, Francesco Carbone, General Manager and Sales Director of Palumbo Superyachts, adds: »Fortunately, we didn’t have any financial impact, as our exposure to Russian buyers is minimal and funds have never been delayed. We have not seen a decrease in leads and negotiations in recent months as Eastern European clients have been offset by a growing number of US and Western European buyers.« Russians in the superyacht market are quickly being displaced. The Black Sea, which might have become an adventure-superyacht cruising and exploring arena, with Ukraine’s coast line sporting some stunning sites and cultural attractions, will be off limits to superyachts for years.
Adventure and Sustainability
William Molloy, Head of Charter of Monaco’s Moravia Yachting, states: »The profile of charter clients has changed recently – we are seeing an increase in younger clients, and charterers who are more conscious of the environment and the impact of their yachting activity. This demographic of charterer also seem to have greater expectations, which we think stems from media transparency and social media – they see the water toys, the lifestyle, and the luxury experiences that superyacht charter can offer, and they want it.« Palumbo’s Francesco Carbone notes: »The pandemic had a significant impact on most of industries across the globe, and yachting was no exception. As a sense of hope arose in 2021 and a ‘new normal’ manifests, the future is (again) perceived as unpredictable. As we can see from the new range of yachting clients: family yachting holidays have become the norm; go-anywhere yachts with long range are rising in popularity; with more people working at sea due to the pandemic, and the increasing need for technology as time goes on, IT support, cybersecurity, and connectivity on superyachts are continuously advancing. Yachts are no longer seen as a vessel for simply getting from one place to the next; instead, the world’s finest yachts are now viewed as destinations. Today’s superyachts are the pinnacle of luxury travel, boasting amenities akin to the world’s best resorts, coupled with state-of-the-art technology and design features. Palumbo’s Giulio Maresca adds: »In the past years we have seen a real concern regarding the environment, yacht owners want to increase their sustainability credentials and limit their carbon footprint. During refits this is realised by the use of lighter materials that allow a reduction of fuel consumption and the introduction of technology aimed at limiting all kinds of emissions. We have also witnessed the emergence of Yacht Explorers that are increasingly in demand in the yaching market.« Bas Peute of Vitters also feels change is imminent: »With increasing fuel prices, the global sustainability and enjoyment-friendly discussions, we see a trend of growing interest in sailing superyachts again. Zooming more into the sailing yacht market, we see upcoming requests for electrical solutions for propulsion, manoeuvring and sail handling. It will be only a matter of time before we see pure green sailing super yachts with no combustion engines on the water.« Arrow Yachts’ Yerin Hobson notes: »We are lucky to have a good global client base from Australia/Asia to the UAE to Europe and the Americas. Our new clients are younger every year and more adventurous. This is great for our teams when building and operating yachts as every project or cruise is very different, from submarines, to helicopters, to cars and SUV’s on board, as well as cruising Kodiak to Raj Ampat, more out of the way places than previously seen. The explorer nature of the younger wealth is definitely a new trait we welcome as a company.«
Y.CO Co-Founder and CEO Charlie Birkett gives a polished summary: »It’s something that’s been said over and over again, but it’s true that we’re seeing a new generation of superyacht owners, who aren’t just younger, but are more principled as well. Clients are no longer interested in commissioning floating palaces and decking them out as symbols of wealth. Instead, they view their yachts as platforms for adventure, and are stocking them with everything from surfboards to submarines, helicopters to all-terrain vehicles, dive equipment and ROVs; and the list goes on. I think it’s definitely true that the romance of yachting is coming back, not just in the design and how they look but in the way they’re being used too. We work with some next-generation owners who are really pushing the boundaries of yacht design and it is exciting to see how the ideas we have worked on with them through our new-build department are evolving into trends. On the one hand, there is increasing popularity for the long sleek hulls that are reminiscent of the 1930s, with perhaps less volume but with better integration of the outside living spaces and more intimacy in the living areas. We’re also seeing clients who are choosing multi-hull platforms that have bigger living spaces but with a smaller overall length and crewing requirements, as well as better manoeuvrability and shallower drafts. All of this allows for exploration and discovery; the ability to visit those hard-to-reach bays and secluded inlets, fitting with how many of our clients are choosing to travel now. And of course, our clients’ desire for more sustainable, responsible yachting solutions is having an effect on the design trends, with features like solar panels that double as awning structures becoming more and more common.
Alpha Marine’s Nikos Dafnias told HANSA: »There is a remarkably positive attitude from the owners towards implementing modern diesel electric & hybrid propulsion technologies which lead to low or even zero emissions on yachts. I was recently informed by charter companies of flotilla sailing yachts that a high percentage – up to 25 % – of small boat charterers are willing to pay a higher charter rate for »greener« boats, which is an unexpectedly encouraging development. The same trend appears in major refits and large yachts. At the same time several universities, research centres, designers and manufacturers carry out important research which evolves fast and provides tangible and applicable results which are implemented on yachts.«
One of the highlights of the past year was a prestigious »Lifetime Achievement Award« going to Gerard Dykstra, after half a century of creating innovative sailing yacht designs and rigs and whose work will doubtless influence, and be continued by, the younger generation of naval architects. »Perseverance« won Best Sailing Yacht under 40 m as well as Best Sailing Yacht of the Year 2022, following on from the likes of: »Athena«, »Hetairos«, the DynaRig, »Maltese Falcon«, »Sailing Yacht A«, »Black Pearl«, »Aquarius« and »Sea Eagle 2«, as well as reviving the J-Class. Classification society DNV’s well-attended superyacht seminar in Monaco (»Turn Uncertainty into Confidence«), on 28 June, saw Towards Zero Carbon and the Future of Fuel form a substantial part of the day’s agenda, the other topic discussed in depth – also drawing on DNV’s vast expertise in shipping – being Cyber Security. Guest speaker, Fraser Yachts’ CEO, Raphael Sauleau, was refreshingly open, sharing stories to the 60+ delegates about relentless attempted cyber attacks at Fraser. DNV experts were keen to point out that they offer consultancy even to non-DNV-classed superyachts.
Refit and Sales Market
Pino di Mora, General Manager of Hill Robinson Italy, gives an expert overview of the strength of the refit market: »The superyacht fleet has more than doubled in the last ten years, with nearly 5,000 yachts of over 24 metres in length currently in service and it keeps growing steadily. As a consequence, the refit market grows accordingly, with Italy maintaining its top slot as the busiest destination country. We can’t say the refit market is booming but it is certainly going through a very positive trend. With more and more superyachts getting delivered every year and, considering the ageing of the current fleet, we predict a strong refit market for years to come. In fact, we are seeing all major refit shipyards undertaking considerable investments in expanding their facilities.«
Fraser’s Raphael Sauleau shares a sales and charter snapshot: »With last year’s record number of new buyers and charterers discovering the experience of luxury yachting for the very first time (around 40 % in the case of Fraser), 2022 has so far seen that level of demand continue. Sales across the industry are currently up 102 % on the 13-year average, and Fraser is proud to have sold both the largest motor yacht (a 100 m+ vessel) and the largest sailing yacht (a 56 m vessel) sold this year. Fraser is currently seeing our strongest year since records began for the total value of yachts sold. Chartering has also seen a significant rise this year, with bookings up over 120 % on 2021 on the Fraser charter fleet, and bookings by our charter brokers up 59 % on 2021.«
Y.CO’s Charlie Birkett sums up: »The yacht sales market has been more buoyant than ever over the last 12 months with a strong appetite from buyers, especially from the US. With demand outstripping supply and few yachts entering the brokerage market especially in the bigger size ranges, and current new build delivery dates at 2025 – 2027, it is clear that we remain in a seller’s market in 2022. The Palm Beach Yacht Show earlier this year demonstrated that there is strong appetite among buyers in the US markets, with the exhibiting yachts each receiving considerable interest. However, the biggest trend of 2022 so far has been the large number of off-market sales, many of which Y.CO has been involved in. With demand as high as it is, and the strengthening of brokerage prices, many sellers have chosen to ›test‹ the market by instructing a well-connected broker to find a buyer discreetly and quickly.«
Any Russian owners wanting to dispose of their superyachts quickly know what to do. Rather than bolstering your insurance and heading for Sochi marina – Burr Taylor of Howden Sturge insurance confided that any owner taking their superyacht to the Black Sea would be mad (even »M.V. Graceful« is in the Baltic Sea) – instruct a well-connected broker (checking if it is a »Kremlin-aligned« one if that might rock your boat).
