We skyped this weekend with a financial advisor who specializes in banking services and structures for the acquisition of superyachts. He wishes to remain anonymous. I asked him first how come much of the superyacht media project an image of an industry blissfully unaffected by the pandemic and if he expected this upbeat assessment to continue.
Definitely, he said. For three reasons, economic and psychological.
First, globally there is a shortage of safe assets, where businesses and wealthy individuals can invest – or park – their excess cash. With interest rates low, even at zero and talk of negative rates, investment in many traditional areas is depressed. Quite simply there is too much money and nowhere to invest it. Even US and Euro government and sovereign bonds are wobbly. A superyacht is not actually a good investment as you don’t get any returns and it doesn’t appreciate like bricks an mortar but you get to keep it. It is a safe investment.
Second – and third – the psychological consequences of the vision of the grim reaper coming in the form of a virus has induced a sense of carpe diem in many potential buyers. You can’t take it with you and you can’t spend it when you are dead. ‘I’ve always wanted a superyacht, now’s the time.’ The spread is balanced between new builds because they take several years by which time the epidemic will have been neutered and resale market by those in a hurry.
A faster conversion from chartering to buying outright is to be expected. In many ways, a charter is becoming a test drive for potential new entrants.
But what about global bankruptcies? we asked. We heard just that day that many vineyards in the champagne sector face ruin due to a dramatic fall in demand. Is that not symptomatic of the economic malaise?
‘To a certain extent, yes. The general feeling is that the victims of the downturn will be the companies that are strapped for cash and have low investor confidence. They – and their employees – will bear the brunt.’
Look to Germany is the mantra. ‘The German economy will be the benchmark for economic resurgence.’
Not enough safe havens for our excess cash? Nice problem to have, we concluded the conversation.