‘Billionaires are doing particularly well.’ But will they buy superyachts?

Mike Stones
By Mike Stones October 3, 2019 12:34

‘Billionaires are doing particularly well.’ But will they buy superyachts?

The value of the Monaco superyacht fleet was put at at 3.9 billion euros. But will billionaires keep buying superyachts?

Billionaires are prospering, particularly in China, the US and Germany, according to Dr Martin Mendes, partner and director, Boston Consulting Group. But whether they will buy superyachts or engage in conventional contractual or banking arrangements is unsure.

“The billionaires are doing a particularly good job,” Mendes told the Superyacht Finance Forum, the day before the Monaco Yacht Show.

Worldwide, there are about 1,700 billionaires. “If you want to know where to find billionaires today, the best places to look are China, US and Germany. Each of those countries has more than 100 billionaires,” he said.

The US tops the table with 382 billionaires at the end of last year. China had 305, while Germany claimed 113. “It [estimating the number and location of billionaires] is a notoriously opaque business market,” said Mendes.

Nevertheless, he reckons that the total number will increase by about 800 in the years up to 2023 from a baseline of 2018. “This will be driven by growth in the number of billionaires from Asia Pacific Region, North America and Western Europe,” said Mendes. “More than 40% of the new billionaires will come from China.” In fact, more than half (56 per cent) of the wealth in China is held by its 305 billionaires.

190 more billionaires

North America can expect to see 190 more billionaires, accounting for 45 per cent of the total. Europe will see 75 more billionaires, representing 18 per cent of the total increase.

But the growth of ultra-high net worth (UHNWI) individuals will not necessarily directly translate into swelling order books for superyacht shipyards or luxury yacht brokers. “While there is a lot of growth potential, for some [cultures], it is not acceptable for individuals to buy yachts and be seen with them,” said Mendes. Then again, you don’t need to be a billionaire to buy a superyacht, he acknowledged.

Mendes also predicted changing attitudes to blockchain and, perhaps, banking arrangements. Blockchain will come under increasing scrutiny, as it does not address specific currency problems. But the technology may become more popular to facilitate contractual arrangements.

“We see blockchain being used to replace contracts of all sorts,” said Mendes. “Replacing contracts with blockchain will make things much easier for businesses buying, selling or servicing yachts. There is a pain point where data is distributed in the cloud and blockchain could overcome that.”

Commenting on the role of banks, he said that while they were not needed to make payments, they were part of the infrastructure and there was no obvious benefit in replacing them. “Much depends on the role of trust and human relationships in respect of profit,” he said.

Trust and human relationships’

High net worth individuals had become accustomed to the ease and convenience of digital apps, features and channels for banking and other activities. Wealthy clients expect their management providers to offer similar experience. “Yet many firms lag behind other sectors in employing digital tools and capabilities and in acquiring the speed agility, and mindset to develop them,” according to the Boston Consulting Group.

Mendes was speaking at the Superyacht Finance Forum, organised by Marine Money, at the Café de Paris, Monaco on Tuesday September 24; the day ahead of the yacht show’s opening.

Circumstantial evidence to support Mendes’s comments about billionaires prospering was on display in Monaco’s harbour, Port Hercules. The show assembled its largest-ever fleet of superyachts, totalling 125 luxury vessels.

The combined value of the Monaco fleet was estimated at 3.9 billion euros. The average asking price of superyachts in the harbour was said to be 37.8 million euros (£33.48 million). A list of the world’s top five billionaires appears below.

World’s five top billionaires 2018

  1. Jeff Bezos, CEO and founder of Amazon. Net worth: $131 billion
  2. Bill Gates, Bill & Melinda Gates Foundation. Co-founder Microsoft. Net worth: $96.5 billion
  3. Warren Buffett, CEO Berkshire Hathaway. Net worth £82.5 billion
  4. Bernard Arnault and family, Chairman and CEO LVMH Moet Hennessy Louis Vuitton. Net worth: $76 billion
  5. Carlos Slim Helu & family, Honorary Chairman, América Móvil. Net worth: $64 billion.

Source: Forbes.

Mike Stones
By Mike Stones October 3, 2019 12:34
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