Monaco Yacht Show – Outlook sunny (for now)
The September sun shone as brilliantly as ever on Port Hercule, home to the Monaco Yacht Show, last week. Familiar stacks of shoes gathered around gangplanks greeted visitors to some of the industry’s finest vessels. But something was new: record demand for superyachts – both old and new.
Double the normal number of superyachts – about 900 – are expected to be sold this year, according to Sam Tucker, head of Superyachts at VesselsValue. “We’ve seen more deals in the first two-thirds of the year than any other year,” Tucker told me at the Marine Money, Superyacht Finance Forum at the Cafe de Paris, the day before the show opened. “If we extrapolate this to the end of the year, we expect 900 deals to get done, which is pretty much double what we would expect to see in a normal year.” To the end of August, the company tracked the sale of 616 superyachts compared with 500 in 2020 and 429 in 2019.
This year’s event seemed a little quieter than the 2019 show, when the organisers assembled the biggest ever superyacht fleet. In those far-off pre-Covid days, Port Hercule welcomed 125 superyachts, 44 of which were making their debut. This year’s event attracted 100 superyachts, with 37 debut vessels. There were 88 motor yachts in the fleet and 12 sailing yachts.
Arthur Brouwer, CEO of Heesen was in particularly buoyant mood. He told a Monaco meeting that the shipyard had built nine vessels and delivered six in the past 18 months. Speculative building had proved a particularly successful strategy. (Perhaps an extra spring in his step was provided by the knowledge that Heesen’s 55m Moskito moored in the port was attracting so many admiring glances).
Hugo Modderman MD Dolfinance, who chaired the Super Yacht Finance Forum, described the impact of soaring demand on availability: “The market [availability of superyachts] has dried up. There are only ‘shelf-warmers’ or over-priced yachts ready for sale. High quality yards are fully backed up until 2026.”‘
Fully backed up until 2026
After the show, Denison Yachting reported a 35% increase in sales compared with 2019. Rising demand was not confined to sales. Denison Charter Management/Marketing revealed a 65% rise in the total number of weeks booked this year compared with 2020. There had also been a 73% increase in the amount of charter fees.
The big question was: why? Followed by the even bigger question: how long it will last? One reason commonly cited is that luxury yachts offer a safe haven for family and friends during the global pandemic. This explanation did not impress Tucker at VesselsValue. He attributed rapidly rising demand to strengthening stock markets and a pandemic-induced sense of personal mortality. “The global pandemic has reminded us [prospective yacht buyers] to enjoy today and that life is precious.”
Confirming rising personal wealth, Brouwer, CEO of Heesen, noted there had recently been a 32% increase in the number of global billionaires to reach 2,755. There was also a 24% increase in the average wealth of billionaires at $4.7bn.
For James Crew, sales director Marine Finance, Close Brothers Aviation & Marine agreed, mortality rather than money accounted for the rise. “What’s driven this is not markets and not confidence for a lot or our clients. People realise they are mortal – Covid affects wealthy people as well as less wealthy people.”
Answering the question how long will soaring demand last proved more complicated. Tucker hoped: “the new owners who rushed into the market aren’t going to rush out just as quickly”.
Check the credit credentials
Neither was there a clear answer for Anthony Buneta, head of Business Development & Wealth Planning at investment bank Société Générale, at the Super Yacht Finance Forum. “The market may need to adapt a bit and what the consequence will be on yachts, jets and real estate, we will see,” he said. Meanwhile, the bank is being extra careful to check the credit credentials of its clients. “We are enjoying the time now. But that does not mean we are not more careful on the credit profile of our clients,” he said. “The fact they made a lot of money quickly does not mean they cannot lose it in a quick way as well in a few years’ time.”
Credit worthiness is not the only factor to consider when planning financing for a superyacht, according to Olivier Blanchet, head of Jet and Yacht Finance, BNP Paribas. The environmental credentials of superyacht design and performance are also becoming more important for the new generations of owners and for BNP Paribas under the leadership of director and CEO Jean-Laurent Bonnafé.
The bank is increasingly active in global markets, not just shipping, to support financially those who are prepared to move from a traditional economy to a more sustainable one, said Blanchet. “The capital requirement will be different in the coming years for green loans [for sustainable projects] and brown loans [for standard projects]. That is to say, the cost of the money will be much higher for the client who decided to go the traditional way [rather an adopt a sustainable approach].”
There was no doubting the sunny outlook for superyacht sales and charters at the Monaco Yacht Show. But whether that signalled a sustainable trend, or a brief Indian Summer remains difficult to tell.
Monaco showcase: Some of the industry’s finest were on display in the south of France. 100 superyachts were on show.