When companies marketing to ultra-high-net-worth individuals want facts, they turn to reliable research sources. Wealth-X, which says it has the world’s largest culled database on these consumers (with net assets of $30 million or more), is among them. In analyzing the spending habits of more than 100,000 ultra-wealthy individuals globally, Wealth-X has uncovered information vital to megayacht builders, designers, brokers, and more. In this Leadership Series interview, Wealth-X’s CEO, Mykolas Rambus, explains why it’s important to not just examine megayacht ownership, but also to anticipate how and why it’s changing.
MegayachtNews.com: Wealth-X has analyzed the spending habits and pastimes of ultra-high-net-worth individuals for four years. When did you start to break out more data specific to superyachts, and why?
Mykolas Rambus: Our research has revealed a wealth of information and insights about the spending habits and passion investments of the super-rich, including their superyacht and private jet ownership or chartering. Compiling and analyzing data on superyacht ownership has been part of our research on the ultra-wealthy from the beginning. Superyachts hold tremendous significance—both as assets and as symbols of the ultra affluent lifestyle—for the world’s ultra-high-net-worth (UHNW) individuals. It is thus imperative that we, as the world’s leading UHNW intelligence and prospecting firm, have a keen understanding of the global UHNW superyacht market.
MegayachtNews.com: What are some of the common assumptions you see being made—both right and wrong—when it comes to the profile of a superyacht owner?
Mykolas Rambus: (1) All billionaires have yachts. This is simply not true—even though they can all afford to own a yacht if they choose to do so. Although yachting remains a hobby for some of the world’s billionaires, others do not share this interest.
(2) Yachting is something that appears particularly attractive to second generation (or older) UHNW individuals. A key exception is Russia, where UHNW individuals are primarily self-made, but are avid yachters. Why the difference? It’s a combination of factors: from yachting offering an escape from the weather in Russia, to yachting representing a particular lifestyle one may aspire to—associated with success. The privacy factor is also quite key for these individuals.
(3) Yachting is an ostentatious display of wealth. This, again, is not true, for many of the world’s wealthiest. Yachting is, in fact, a way for them to take private holidays with their loved ones, and is often a highly family-oriented activity.
MegayachtNews.com: Do you see any trends emerging among superyacht owners and buyers?
Mykolas Rambus: UHNW individuals are increasingly global. With many children of UHNW individuals having attended Western education institutions and having forged international connections, there is a homogenization of hobbies taking place—and yachting is something that is increasingly attractive among the global UHNW population.
It seems that there are more and more investors in the superyacht industry, outside of just owning a personal yacht—with billionaires and ultra-wealthy individuals investing in new marinas (e.g. in Montenegro) and in shipyards—suggesting that this investment-savvy group of individuals also see positive signs in the market and are taking early steps to capitalize on this potential. Certainly the entrance of Asian investors—Dalian Wanda and Sunseeker, Weichai Group and Ferreti, for example—in the yachting industry is a positive sign.
As we see more wealth being passed down across generations (we predict that US$16 trillion will be passed down in the next 30 years), we expect to see a surge in demand for yachts, superyachts and megayachts.
MegayachtNews.com: Yachting has ranked among the top three activities overall for UHNWIs in mature markets for a few years. Among the emerging wealth markets, does yachting rank nearly as highly? If not, what outranks it, and what are some key reasons it isn’t as valued or prioritized?
Mykolas Rambus: This really depends on the region. For example, in the Middle East, yachting is certainly a particularly attractive hobby for the UHNW population—particularly for billionaires. Proximity to the Mediterranean is a key factor, but having an affinity for yachting and a desire for the mobility and privacy that that hobby affords are also important factors. In fact, for most superyacht owners, privacy and mobility are hugely attractive factors that draw them to this type of leisure. But in Asia, yachting is still very much a nascent industry. For Asian UHNW individuals, there is the cultural difference. Generally speaking, Asia’s ultra wealthy have a very limited interest in outdoor pursuits. There are also contextual problems. For example, in China, the state of the environment and level of pollution in many areas means that travel on the water is not considered a luxurious activity. For these reasons, yachting has not yet taken off in China. Instead, golf seems to be the most common interest there. There are also institutional barriers such as high import taxes, and fears that superyacht owners will be perceived to be corrupt by others. In contrast, Singapore and Hong Kong are home to the region’s most mature superyacht markets. Environmental standards in these two locations are higher, and niche marinas are well maintained and attract a global clientele. In Asia, we are looking at mostly first-generation UHNW individuals—and this is one of the reasons the yachting industry is still very much underdeveloped. In the Middle East, a greater share of ultra-affluent individuals have inherited some or all of their wealth (more than the global average).
MegayachtNews.com: Builders, designers, and even brokers believe they have a strong grasp of who their target consumer is. Are they overlooking any important demographic shifts (gender, families, etc.)?
Mykolas Rambus: The number of new builds and brokerage have increased this year—a full recovery from the GFC is still pending—cash remains king and UHNW individuals are cautious when it comes to buying goods that are a large liability – e.g. maintenance costs alone. Unlike private jets, which are primarily thought of as a business investment, superyachts are used largely for leisure and tied to family time. With UHNW individuals feeling increasingly confident that the problems of the GFC are behind them, more are turning towards such leisure pursuits with more interest than before. We see this, for example, in the slight decrease in the share of UHNW wealth held in cash in the last couple of years.
There’s a world of potential though, with fast growth expected in the UHNW and billionaire populations. The latter is expected to exceed 3,800 by 2020.
There’s still a gap in terms of the number of UHNW individuals that can afford a superyacht (more than 12,000 individuals worldwide) and the number of superyachts out there—less than 5,000.
MegayachtNews.com: Wealth-X recently revealed data showing that the world’s billionaire population has hit a record high. Some people believe this is promising for future superyacht sales. Can a connection, whether directly or indirectly, even be made between the two?
Mykolas Rambus: There is no doubt that there is a correlation. Billionaires, and demi-billionaires, can easily afford to own these superyachts; many other UHNW individuals cannot. Although yachting is certainly a hobby shared by many of the world’s wealthiest, not all of these individuals have an interest in yachting. So the relationship certainly is not one to one.