Palm Beach and the ‘rocket’ heading for yachting
The 75m Admiral Kensho was on display at the Palm Beach Boat Show.
It began when the client got in touch from his ski chalet during one Christmas holiday. While the family were out skiing, he asked broker Will Christie to help him design a new yacht.
The original idea was for about a 45m, 500GT vessel and they swapped umpteen sketches and photos, but “about a thousand” revisions later, the project grew into the 75m, 1,989 GT Admiral-built Kensho.
A standout on the charter market, Christie was selling the award-winning yacht for the first time at the recent Palm Beach International Boat Show.
“She’s very cool. Until people see her they don’t appreciate how special she is,” the Christie Yachts founder tells us. “I had some properly experienced yacht owners onboard, two or three particularly who own big boats and have built a lot of boats, and they were seriously impressed. The deckhead heights are insane.”
Christie was also showing the 57m Feadship Solace, fresh to the market after a reimagining by Pendennis and Vickers Studio, and the new 43m Alia Yachts Ximena.
Success can be measured in different ways. For Christie it was an exercise in introducing the boats to the key figures in the sales market as well as potential clients.
“It’s about exposure, it’s getting the right people on board, it’s creating that story and that excitement in the market,” says Christie.
“Have we sold any boats off this boat show yet? No. Are we having ongoing discussions? Yes. Sometimes things take months to come out in the wash. In almost 25 years in the industry I’ve only ever sold two boats directly off the back of a boat show.”
‘Monaco vibe’
AJ Blackmon, CEO of the Miami Beach-based Ikonic Yachts describes boat shows as “the most old-school, archaic way of doing business” but he gives last month’s Palm Beach event a nine out of 10. “The only way it could have been a 10 was if someone came up and contracted a 65m new build, which is rare,” he says.
For Blackmon the “narrative” of the show was that people were there to transact and to get the ball rolling and “not to waste people’s time”. His 20-something-strong Whatsapp group of next-generation yachting figures in the US echoed that, he said. “Everybody was super pumped, there was a lot of good energy, a lot of good traffic,” he adds.
“I went to multiple events and I know the people that were there. They’re very real buyers. And I do know deals that are closing from the show.”
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Blackmon says he has begun the sales process on a custom Dutch day boat and another vessel under 40m. The quality of pedigree boats on show gave it a “Monaco vibe,” he says.
“This was the first time where I was walking through the big boat section with clients at night where it was really baffling, looking at all the boats from Boardwalk to Kensho,” he adds. “It made you feel like you were in Europe.”
Despite an asking price of €124.5m, Kensho attracted “crazy” amounts of interest, according to Christie.
“Buyers do come to boat shows certainly, but sometimes they are at the beginning of their journey, trying to get their eye in,” he says. “A really active buyer ready to pull the trigger is willing to travel to some random port in Europe in November to see one boat.
“There are also a lot of very rich people who like looking at boats, but have no intention of buying them – after all, boats shows are fun, you get taken around by a broker, everyone rolls out the red carpet, you get taken out for meals…
“So I never get that excited. The life of a broker is one of almost constant disappointment. You become a cynical realist while remaining optimistic.”
‘Good spark’
Brandon Kummer, co-founder of the Florida-based Kitson Yachts says his gut feeling is that the show was more about “quality than quantity”. One conversation took him to Italy last week to visit potential shipyards.
“We’re working on two deals right now from the show, one being a walk-up and the other a client we’ve been working with for a while. The boat show was a good spark to re-engage him,” he says.
The backdrop of the US-Israeli war with Iran is an added complication to decision-making process.
“People only buy yachts when a) they’ve made a load of money, b) they’re not too busy and c) when they see blue skies ahead. At the moment one of those stars isn’t aligned,” Christie says.
“The market might just be a little bit quiet for a few weeks while everyone works out what the lasting impact might be.”
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From a US buyer’s perspective, Blackmon believes people are “still pretty positive” of a resolution to the war sometime soon. The only tangible effect so far is the cost of diesel, which may influence how people use their boat, although the Miami day boat market seems unfazed, he suggests.
“What it is doing more is just building up more leverage to the buyer to use in a deal where emotions are running high. It’s a case of, ‘I’m the only guy with money willing to write you a cheque right now, today, for the boat,’” he says.
For yachts in the 30-40m range, it is fast becoming a buyer’s market, adds Blackmon.
“There were over 100 boats in the Palm Beach Boat Show around 30m so that tells the story, right?” he says.
“You’re going to see a lot of sobering in the next two months where guys are saying, ‘OK, I really do need to get rid of this boat’ because those assets are depreciating at a steep curve. And a lot of these are guys who bought in Covid at the top of the market.
“But the world has significantly changed in valuations. And they’re looking down the barrel of a gun saying, ‘OK, do I keep spending a hundred thousand a month owning this thing? Or do I rip the band aid and realise that $5m loss in the last four years?’ It’s not an easy decision to make.”
‘Cusp of a rocket’
Kummer describes the market for larger boats of 50m and upwards as strong but says the issue is lack of inventory over about 70m.
“It’s incredible how busy that market is and the majority of that market share is coming from the Americans,” he says.
“There’s a lot of LOIs [letters of intent] out there, there’s deals happening for sure over the 100m mark. And with new construction delivery slots out to 2033 it’s helping the depreciation schedules of these brokerage boats.”
The takeaway from the show is that Palm Beach, from real estate to yachting, is becoming a “major player”, according to Blackmon.
“You look at the real estate deals that are closing in Palm Beach for $140-170m; all of the big Silicon Valley guys are moving here, Sergey Brin, Zuckerberg, Palantir,” he says. “I feel like we’re really on the cusp of a rocket taking off in yachting at the very, very high end.
“My prediction is that Palm Beach becomes the new version of Monaco, but potentially better in the next three to five years. If not sooner.”
But despite the cash sloshing around, all brokers know the deal is not done until the money is in the bank.
“A lot of people say all the right things onboard a boat and are all very excited. But just because someone really likes a boat doesn’t mean they’re going to buy it,” concludes Christie.
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