What better way to introduce the yachting lifestyle to luxury-focused journalists and, by extent, their readers than to host them aboard a megayacht? That’s what Burgess did earlier this month in New York City, using the 151-foot (46-meter) Katya, built by Delta Marine in 2009. Katya, whose central sales listing is held by Burgess, was the first megayacht—even the first boat—some of the journalists had ever toured.
One of the most prominent journalists present, however, was more than familiar with yachting. He’s Robert Frank (at right in the photo below), the wealth reporter for CNBC, who has written about yachts and megayachts through much of his career. Frank was therefore tapped to conduct a Q&A with Jonathan Beckett (at left in the photo), president and CEO of Burgess, on behalf of the assembled journalists, to put the yachting sector into perspective. The talk was termed the “Superyachts: State of the Ultimate High-End Market.” Here’s a partial transcript of the interview.
Frank: How has the yacht market changed pre-crisis to now?
Beckett: A yacht owner phoned me the other day and said, ‘What’s the market like?” and I said, “It’s a fantastic market… if you’re a buyer.” Pre-2008 it was very much a sellers’ market. There was huge demand, and the supply wasn’t there to satisfy the demand. A number of owners were commissioning and building from two to five yachts and selling them during production for a premium. Today there’s a huge supply in comparison to demand, so prices are under enormous pressure. Prices have reduced substantially, and no one is building on spec any more. There are a lot of deals to be done. That’s the interesting thing about the American market. Americans understand about deals’ and there are fantastic yachts out there at fantastic prices.
Frank: What is the new geography of wealth? Where are the buyers coming from?
Beckett: The traditional markets were America, Europe’ and the Middle East, particularly Saudi Arabia. Those markets are still very much in play; however, Europe is struggling a bit. The most active new market is still Russia, and that whole block has a strong interest in buying particularly big yachts. The Gulf States market has come on very strongly, again for very large yachts. Our company has been involved in the design and commissioning of the world’s largest yacht. It’s taken five years to build, is 180 meters (591ft) in length, and she will be the largest and fastest yacht in the world. At the top end of our market, there’s a big demand for the 100-meters (328ft) plus and $250-million-plus yachts. There are 15 to 18 of those size yachts in production, which will cost anywhere from $250 to $500 million. Australia has also ridden the financial crisis much better than other countries and has a culture of water and sailing.
Frank: From the media perspective, it seems that fortunes are back and wealth is back, and real estate in New York and Miami is seeing high prices. What has changed in the minds of the wealthy after the crisis?
Beckett: In our market demand is definitely coming back, and we have had more interest in Katya now than in the last 12 months. A lot of our clients were feeling nervous even if they were billionaires. They put a lot of their assets up for sale. The market has settled over the last couple of years, and now they’re more comfortable with where they are even if their wealth has reduced. Now they are very value conscious—even the Russians compared to what they were in 2008. They disappeared from our market for 18 months. There will always be prime assets which people will pay a premium for.
Frank: You work with some of the most interesting people on the planet, CEOs or entrepreneurs. What have you learned from your clients?
Beckett: The devil is in the details. It all hinges on the relationship with each individual client. Knowing the client and getting into the psyche of the client who comes onboard the yacht is important, everything from what they like to drink to their favorite music. We customize the experience.
Frank: How important is face time with the client?
Beckett: There are 2,500 superyachts in the world, and we sell 20 to 30 a year, so we are really cherry picking clients one by one. One of the reasons we have done very well is that all our brokers and managers are employed personnel, so if we have an inquiry from Beijing or Los Angeles or Moscow, we will immediately dispatch someone on a plane to talk to the client in person. Independent contractor brokers may try to do it by phone or email because they have to pay their own expenses.
Frank: And where do you find the next new high-net-worth client?
Beckett: Referrals from existing clients. There’s a great deal of respect between these high-net-worth individuals. Who better to ask than your fellow world leaders sitting at the top? We also are very active in our marketing; everything from sending out our sleek catalogues to strategic alliances with exclusive luxury brands. We’re very focused—the superyacht industry may seem glamorous from the outside, but it’s a 24/7 business every day of the year, and we are not complacent. We are constantly running from one airport or meeting to the next rather than sitting by the pool.