FT SPECIAL REPORT Yachts & Marinas

Thursday June 20 2013 www.ft.com/reports | twitter.com/ftreports

Highs and Inside » Weighing anchors Glamour marinas lows reflect versus their dowdier rivals Page 2 tough time Splashing the cash The state of yacht finance, plus economical design for sailing Page 2

India gets under way Dazzling new superyacht launches cannot Setting sail with disguise a difficult market or sadness at a ‘early adopters’ off Mumbai high-profile tragedy, writes Richard Donkin The Artemis Racing America’s Cup team training off San Francisco before Andrew Simpson’s fatal accident America’s Cup Page 3

ometimes it takes a tragedy criticised by some who fear that the designed motor yachts afloat. Brokers seem more sanguine. builder, Lurssen. At 180m, it is the to remind those who sink drive to pursue ever-better perform- New technology and design com- “When I was a child I saw the big world’s largest superyacht, taking The case for millions into sport and lei- ance is overtaking the skills of the prise the lifeblood of yachting. But boats rotting away on the Hamble [in over from Roman Abramovich’s 163m sure that ambition can out- best crews. But pioneering work con- the multibillion dollar business that Hampshire, England] and people said Eclipse. With engines that deliver Britannia II grow the skills, invention tinues to push the limits of design and ranges from weekend sailors in din- you’d never see them again. But now 94,000hp and a top speed of 30 knots, Opinion: why Sand enterprise of those who work at performance. Last November, Paul ghies to billionaires in floating pal- we’re seeing yachts three times the it is a throwback to the boom time of the sharp end of their game. The Larsen smashed the world speed aces is under pressure because of the size of those,” says Nicholas Edmis- the early 2000s. Britain needs a death last month of the British Olym- record, taking Vestas Sailrocket 2 to financial crisis. The three and four- ton, chairman and managing partner Up to now, much of the industry has new state yacht pic gold medallist Andrew Simpson an average of 75mph over 500m. year builds that have seen many boat- of Edmiston, the yacht broker. survived by either living off existing has brought sadness to the prepara- The thirst for speed and competition yards through the recession are com- “But as an industry we’re having to orders, reducing capacity, taking on Page 4 tions for the America’s Cup in July. has entered the superyacht market plete and builders are looking for new look farther afield for new business,” refit work, or shifting ownership in a The America’s Cup is at the pinna- with the rise of design-specific regat- customers. he says. “I’ve just sold a boat to an number of high-profile takeovers. Only cle of sailing, bringing together the tas such as the Perini Navi Cup and “Early in the year I could count on Indonesian, we’re active in Brazil and two weeks ago the FT reported the Boatbuilding best sailors and the most obsessive of the Dubois Cup. Of the 15 100 metre- one hand the number of people we we’ve just taken a big order from planned acquisition of Sunseeker, the business leaders, often those with the plus superyachts being built, four are knew wanting the yachts we build,” Mexico. The US is beginning to wake UK-based motor yacht manufacturer with brio deepest pockets. Add to this the kind sailing yachts. The biggest is the 147m says Burak Akgül, managing director up again but we’re probably not going by China’s Dalian Wanda Group. How Italy’s yards of design flair that is taking sailing White Pearl, under construction by of Perini Navi Group, one of Italy’s to see the activity we saw in the early Takeovers aside, tight margins, a technologies into new and untried ter- Abu Dhabi Mar subsidiary Nobiskrug most respected builders. “In the past 2000s in a hurry.” surplus of cut-price yachts in the are riding out the ritory and the result is a seductive, in Germany. It is reported to two months since St Barths Bucket The harshness of the business cli- second-hand market and a reluct- financial storm costly and dangerous cocktail. have been ordered by Russian busi- [regatta] interest has been building, so mate is only partially masked by daz- ance to spend among some of the The 72ft-long, wing-sailed catama- nessman Andrey Melnichenko, owner we’re optimistic. We need to find cus- zling new launches, such as that Page 4 rans contesting the cup have been of “A”, one of the most radically tomers. It’s the same for everyone.” recently of Azzam by the German Continued on Page 3 2 ★ FINANCIAL TIMES THURSDAY JUNE 20 2013 Yachts & Marinas Mediterranean glamour ports fall behind times

Facilities Cheaper locations with modern utilities sell themselves as alternatives to congested berths such as Monaco, says Richard Donkin

onaco’s Port Hercules is inferior services to more modern Mr Jones lists four priorities to meet consistently rated as one developments where operators work clients’ needs: location, utilities, staff of the world’s most hard to meet the year-round needs of and security. “Location comes first. Is exclusive berths for lux- boat owners and crews. the marina where people want to be – ury yachts. Yet the Medi- “More often than not, we spend the close to great cruising and in the right Mterranean principality’s port offers most time with captains and crews spot, such as St Tropez in France or limited privacy and its services are ensuring the operational needs of the St Barths in the Caribbean?” surpassed by less flamboyant loca- yachts are met and the crew have the Second, says Mr Jones, are practical tions. The same goes for Marina facilities to make their work enjoya- facilities such as sewage disposal, fuel Grande on Capri and Portofino in ble,” says Kurt Fraser, sales and mar- delivery and power. The big marinas mainland Italy – both a squeeze for keting director of Camper & Nichol- should have the means to provide ade- the big yachts. sons Marinas. quate electricity. What does it take to join the top The needs of boat owners fluctuate This is becoming increasingly league of exclusive superyacht mari- depending on the season and this is important for the biggest yachts. A nas? The answer – unfortunately for reflected in the choice of marina. A pending EU directive will insist on marina developers – is almost always distinction can be made between har- land-based electrical power in port, the things money cannot buy. “It’s all bours that owners will visit when hol- rather than reliance on generators, about location – heritage, history, idaying, and marinas that may be which are often viewed as a nuisance harking back to the 1960s when celeb- used for servicing, fuelling and refits. and pollutant. rities made fishing villages such as Roman Abramovich, the Russian oil Some of the biggest yachts under Capri, Porto Cervo [in Sardinia] and billionaire, for example, uses an unim- construction will use the 6,600 volt High stakes: Monaco offers heritage and history but its services are surpassed by some less famous marinas Richard Donkin St Tropez the places to be seen in,” posing stretch of commercial docks in standard of merchant marine and says Dean Smith, marketing director Barcelona so that he can have his commercial shipping but few marinas of MDL Marinas. yachts serviced in privacy at the offer the appropriate single-cable Jones. “We focus on training and At another marina, a manager waits CCTV and a security plan for major “To build a facility you need to MB92 refit and repair yard. “It’s an power supplies. Port Tarraco on maintaining motivation and morale for one incoming boat with rolls of incidents.” overcome engineering challenges, but unglamorous part of the port but big Spain’s Catalan coast has become the among staff. They're used to dealing turf so that the owner can practise his Newer venues in countries such as you can’t create the glitz and glamour enough to take his superyachts, and first Mediterranean marina to do so. with unusual requests.” golf swing on deck. Croatia and Montenegro offer increas- of Portofino or Monaco on Grand Prix it’s fully secure with commercial- “We have the deep-water draft and A yacht arrived at one of his mari- Security is crucial for yacht owners ingly high standards, often with tax weekend,” he says. “Those places owe grade facilities,” says Mr Smith. access to services that enable us to nas with a damaged vase, he says. “It and marinas. Many superyacht own- benefits and lower berthing costs than so much to their history.” Yacht owners and managers will offer long stays for megayachts,” says wouldn’t have been a big issue, but ers shunned Antigua for years after the established Mediterranean haunts. While glamour, ambience and herit- often negotiate private deals to bring Margarete Kalinowski, Port Tarraco’s the owner’s wife collects works of art the skipper of a 50m yacht was shot Mr Fraser describes some of the age allow the exclusive Italian and their yachts to the most fashionable head of sales and marketing. and this was one of a pair.” The dead when walking through English new developments as “commercial vil- French marinas to charge some of the ports. “It’s really about who you know While different marinas fulfil differ- marina staff arranged a private jet to Harbour in 2009. “If a facility isn’t lages” with a mixture of retail and highest mooring fees in the world, a in some of those places,” says Kenny ent niches for users, the ones that go to Italy while the artist who made secure you simply won’t have boats,” restaurants. picture-book setting is not the whole Jones, executive vice-president of stand out provide something more the original crafted a replacement. says Mr Jones. “Spas, beach clubs, crew bars, on- story in marina excellence. Indeed, operations at IGY Marinas, which than an access code to the shower “The owner’s wife was none the Mr Fraser agrees: “All of our mari- site hotels and concierge services – many of the choicest locations have runs 13 marinas in seven countries. block. “Staffing is critical,” says Mr wiser,” says Mr Jones. nas have 24-hour security personnel, the list goes on,” he says. Buyers and specialist lenders explore alternative funding models

The range of institutions bottom end of the new-build believes buyers and special- availability of institutional Yacht-for-yacht swaps are Finance offering finance and the yacht market, 30-45 metre ist lenders need to explore finance, sellers are filling the most prevalent form of parameters for securing a boats, is also overcrowded. alternative models. “I spoke the void, and sometimes part-exchange, according to Perceptions of value loan have narrowed since Competition is rife and to someone [who also pro- provide “very generous Jamie Small, sales broker have changed, writes the boom of 2006-08. Loan- residual value low, offering vides yacht finance] and he terms of vendor financing”, for OceanStyle By Burgess. to-value ratios have fallen little encouragement to a said, ‘the business model is says Jim Acher, a sales bro- “But ultimately they’re William Mathieson from pre-recession highs of financier. dead; don’t spend too much ker with Bluewater Broker- very difficult to make work. 80 per cent to an average of A healthier section of the time trying to get loans age. “This can be 50 per You’ve got two impassioned 50-60 per cent, and the max- market is the fully custom approved because they’re cent [loan to agreed selling owners invariably pricing Up to the crash of 2008, imum term appears to be 60m-plus range, costing not happening at the price], and on occasion their yachts higher than banks were queueing up to seven years. The corporate from €50m up to €250m. moment.’” even more.” they actually are.” offer finance to aspiring and private arms of banks “We’re more interested in Ciris Capital is exploring Market inertia is forcing Sellers and brokers are superyacht owners. The are under greater scrutiny the new builds from 40 other avenues because, as sellers and brokers to think using such approaches in new-build market was and they demand the same metres upwards,” says Mr Mr Immink says: “The seller laterally. “Some sellers will an attempt to bring equilib- booming, loan-to-value of potential clients. Burgess. “It’s because of the is becoming more and more consider further discounts rium back to the market. ratios were sky high, and Mark Burgess, executive high intrinsic value of the involved in arranging loans if they are given some The superyacht industry finance was easily accessi- officer and counsel at BNP asset.” Caution also per- through seller finance.” future use of the sold vessel needs it in order to return ble. As the market slowed, Paribas (Suisse) – one of the vades the 30-35m second- With resale yachts at rock- through amenable charter to growth. the perceived safety of few banking institutions hand market. “There’s a bottom prices and new options,” Mr Acher adds. Mr Small is pessimistic yachts as assets weakened, that promotes itself as a Shopping around: the Singapore Yacht Show 2012 perception that a bubble builds priced competitively, Another trend in the sec- about the future of conven- and lenders have grown superyacht lender – says exists in this segment and owners and shipyards are ond-hand market is offering tional yacht finance. The cautious. the bank’s position remains a [market] correction is examining part-financing part-exchange arrange- reasons for the malaise In mid-2013, finance is “very customer driven”. the loan can form the basis liquidity”, as Mr Burgess needed.” the sale or construction of ments, in which assets such could be longstanding: growing harder to find for The accepted paradigm for a longstanding agree- puts it, can “do better The yacht finance market vessels. This can change as jets and island villas are “[Securing] finance for superyachts, which can cost within yacht lending, and ment with the client, who things with their own seems to be in retreat, with sellers’ negative cash flow used as capital to fund the yachts at the moment is from €1m for a second-hand one of which BNP Paribas brings a portfolio of man- money elsewhere”. the number of lenders fall- into positive, and in a purchase. Such options, very difficult. This is prima- 30m yacht to more than is a proponent, is that ageable assets to the table. The saturated state of the ing. Remco Immink, direc- resale, a seller can recoup “whilst not for the top end rily because of the lack of €1m a metre for a top-end financing a yacht purchase The most viable clients are second-hand superyacht tor of superyacht financier some money lost through of the market”, says Mr financial supply, and custom build. Where availa- is no longer a lender’s moti- those who do not necessar- market has distorted prices, Ciris Capital, says institu- depreciation. Immink, “could become because of a lack of appetite ble, that finance comes with vation. Instead, the yacht ily require the capital but and put lenders off resale tional lending has almost Because of the state of the popular in the future [for for financing what, in its a growing list of caveats. itself is a loss leader, while who, with “the increased finance and refinance. The died out. Mr Immink sales market and limited smaller yachts]”. essence, is a luxury toy.” Designs balance cost and luxury

friends. They also want a industry has a lot of work Obviously, the cheapest Economy larger swimming pool, to do to develop effective way to move a boat is by which does not add to the rotation between vessels. A sail, although less than 10 Contributors » These days, everyone costs. good chef costs between per cent of Mr Connor’s cli- is looking for value The best way to reduce $11,000 and $12,000 a month, ents have sailing yachts. expense is to charter a ves- which is expensive when These are now highly auto- for money, says sel, although this needs to the vessel is in a shipyard mated, using computer-con- Richard Donkin Rod Newing be accommodated in the for refit. trolled, powered sail han- Freelance journalist original design. Owners “If owners only want to dling systems. who do not charter “can use the boat 12 weeks a Mr Dubois, who invented Don Hoyt Gorman While the super-rich have have bigger, more luxurious year, they should be able to the unmanned winches in Business editor, not lost all their wealth in cabins”, says Ed Dubois, hire the same hospitality widespread use, says all his Superyacht Group these straitened times, most founder of Dubois Naval crew for each trip,” he says, boats are fully automated owners of large yachts are Architects. He adds that “with members being reas- and one person could lift Victor Mallet wary of conspicuous spend- less than half his boats are signed to other regular the anchor, raise the sails, FT south Asia bureau chief ing. They also want value chartered and rates depend yachts under the same man- sail away and change the for money from their run- on the number of cabins: a agement.” wind from one side to the William Mathieson ning costs. 50m vessel normally has an Given that Mr Connor other, just by touching a editor of “I don’t have a single cli- owner’s cabin and four says most boats spend more computer screen. However, SuperyachtNews.com ent who isn’t sensitive to guest cabins and charters than 95 per cent of their he warns that sails are the amount they are spend- for about €180,000 a week. expensive, so, to save wear, Rod Newing ing on their yachts,” says One less cabin reduces the crews can motor-sail on Freelance journalist Rupert Connor, president of rate to €130,000-€140,000. delivery trips using a sim- Luxury Yacht, a yacht man- Mr Winch says owners ‘The rich are like the ple delivery sail. Martin Redmayne agement group. can recover half or even all rest of us, except Cost control starts with Chairman, The Superyacht Andrew Winch, founder their operating costs by the design process. Length, group of Andrew Winch Designs, chartering, although it is instead of looking to number of cabins and recre- which works on yachts, pri- difficult to achieve zero life- ation facilities all affect Jerry Andrews vate jets, houses and cars, style costs. For chartering, save £100 they look running costs. However, Commissioning editor agrees that every client is he would design in more for tens of millions’ attention to small details keen to avoid wasting facilities, such as larger can have a big impact, such Steven Bird money. “They are like the steam rooms, jacuzzis, sau- as selection of materials. Designer rest of us,” he says, “except nas and dining tables. High-gloss varnish, stain- that instead of looking to Crew are the largest time moored, captains must less steel and exotic materi- Andy Mears save £100 or £1,000, they expense in running a yacht seek cost-effective berthing. als can require frequent Picture editor look for millions or tens of and account for between 30 Rather than using the most attention. millions”. and 40 per cent of operating convenient dock at $7/ft a Mr Connor says for one of For advertising details, The general rule in the costs, says Mr Connor. day, they could get a tow up his clients a $100,000 protec- contact: Ian Edwards, industry is that superyachts Owners mainly want a good the river and dock for $1.50/ tive coating on a Phone +44 020 7873 3272 cost 10 per cent of their chef and stewards to pro- ft. Even if the tow costs million-dollar paint job Email [email protected] purchase price in annual vide superior hotel-type $1,000 each way, it is a big has extended its life by or your usual FT running costs. Mr Winch services. “It is all about lux- saving. two years. representative. points out that the easiest ury living,” says Mr Dubois. With fuel at 27 per cent of “We like to be involved in way to save costs is to build “Handling the boat is the operating costs, he advises the design process as soon All FT Reports are available a smaller boat to the same easy bit.” an aggressive search for as possible,” he says. “A lot on FT.com at ft.com/reports quality. However, owners Good senior crew are competitive quotes. of owners do not under- Follow us on Twitter at are actually building bigger essential, so there is little Whereas cars and almost all stand the implications of twitter.com/ftreports yachts more cost effec- saving to be had by hiring commercial shipping have their decisions until the tively, but with less passen- cheaply. Mr Connor says one engine, private yachts end of the project. Most All editorial content in this ger capacity. Instead of that owners are willing to usually have two. Owners yachts are run on a very supplement is produced by beds for 25-30 guests, they pay a premium for continu- do not want to save, emotional basis, with very the FT. Advertisers have no want larger rooms for just ity of good service, but not because they like the secu- little cost or break-even influence over or prior sight the family and four to six 365 days a year. He says the rity of a spare engine. analysis on decisions.” of articles or online material. FINANCIAL TIMES THURSDAY JUNE 20 2013 ★ 3 Yachts & Marinas Russia delays tougher marine emissions standards

plan for introduction in increased costs of installa- boatyards that faced pres- engines that are Tier III Islands and Cook Islands. Environment January 2016, by surprise. tion and maintenance of sure from the IMO regula- compliant. “The primary reason for The new standards new systems prompted tions – most smaller high- The US delegation to the the US opposition to a delay Regulations could known as IMO Tier III mean industry representations. speed yachts are powered IMO is strongly in favour of . . . for the North America affect charter, writes that all ships, including The primary lobbying by the M94 or M93 power the Tier III emission limits, ECAs is to improve the air superyachts, will have to body, the International plant from the German and, by their own admis- quality from the impact of Don Hoyt Gorman reduce their emissions dras- Council of Marine Industry engine manufacturer MTU. sion, did not foresee the today’s marine vessels for tically, requiring the instal- Associations (Icomia), con- But at the meeting of the Russian move. the health and welfare of lation of selective catalytic ducted an investigation and IMO’s marine environmen- Jeffrey G. Lantz, director US and Canadian citizens,” Stringent new emissions reduction (SCR) systems. presented its argument to tal protection committee in of commercial regulations Mr Lantz adds. standards for yachts have Yacht builders were con- the IMO in May. Citing sig- London in May, Icomia’s Yacht and standards with the US “US engine manufactur- been delayed after a sur- cerned that the systems – nificant economic impact argument – which had been Coast Guard and head of ers have made significant World’s largest: Azzam Lurssen prise intervention by the which are relatively large on a sector of the yachting supported by delegations builders the US delegation to the investments and are pre- Russian delegation at a and complex – would not fit industry, Icomia asked for a from the Marshall Islands IMO, says: “The US argued pared to meet the Tier III meeting of the International into the engine rooms of three-year delay to allow and the Cook Islands – was were to retain the worldwide 2016 standards in 2016. Unfortu- Maritime Organisation yachts below the 500 gross innovations in SCR technol- overshadowed by the Rus- concerned timeline. It was only after nately, this proposed delay (IMO) – the highest author- ton threshold. Shipyards ogy to reduce the size of sian proposal. Russia’s the decision ... to agree removes certainty and regu- Highs and ity on marine pollution by and designers were study- the systems. move successfully got the that the with Russia’s worldwide latory predictability, which shipping. ing redesigns, in some cases According to data from IMO to declare the five-year 2021 proposal that the US is important for their busi- At last month’s meeting eliminating a guest cabin to the industry resource delay in the onset of the systems proposed keeping the 2016 ness planning.” lows reflect the introduction of the house the required exhaust SuperyachtIntelligence.com, emissions limits for all would not date for the North America The Russian proposal is toughest restrictions yet after-treatment system. the yards most likely to be types of vessel, worldwide. and Caribbean Sea Emis- expected to be adopted at was postponed for five In a segment heavily reli- affected by the Tier III lim- As a result, yacht build- fit into the sion Control Areas (ECAs), the next IMO’s environmen- tough time years to 2021. The decision ant on charter, worries its are Azimut, Pershing ers and engine manufactur- but retaining the Russia tal protection committee followed Russian pressure about the potential loss of (Ferretti), Sanlorenzo, Over- ers are now likely to spend engine 2021 timeline for yachts meeting in spring 2014, that took the US delegation, 20 per cent of a vessel’s marine, Leopard and Sun- this time researching and rooms under 500 gross tons, as and is not expected to be who backed the original guest capacity, plus the seeker. It was not only the designing both yachts and proposed by the Marshall challenged or overturned. Continued from Page 1

world’s wealthiest people, is doing little to lift the gloom in the market. “I can’t believe more businesses haven’t gone bust because it’s a fine line between survival and collapse,” says Martin Redmayne, chairman and Dipping a toe: editor-in-chief of the Superyacht Group, the publisher and conference organiser. “It’s the businesses that don’t have a marketing budget, that relied on the strength of the market to bring business to their yards and used Indians begin the deposit on the next project to finance the end of the last one – they’re the ones most at risk.” Some 1,720 yachts – about a third of the world’s yachts between 20m and a voyage of 45m – are for sale, according to the yacht brokers Burgess. Over-supply is stagnating the market since, for many owners, the only obstacle to a new yacht is their existing one. discovery “Given that something like 200 yachts a year are sold second-hand, it will take 10 years to clean out the supply even if no new yachts of that length come on to the market,” says Jonathan Beckett, chief executive of Burgess. At the very top of the mar- ket, however, for boats of more than 60m, there are understood to be buy- ers, so the yards involved in big builds such as Lurssen, the German builder, and Feadship Royal Dutch India Off the Mumbai coastline, the signs are Shipyards are faring relatively well. “There’s been a flight to quality and of a country finally setting sail, although in a Feadship you’re getting the very best,” says Chris Cecil-Wright, a progress remains slow, writes Victor Mallet former partner at Edmiston and now an independent broker specialising in yachts over 50m. While still at Edmis- visit to the Defence Services is dominated by the three historic Sailing home: approaching the Colaba been blocked by the western state’s Bharat Kewalramani, a Mumbai-based ton he recently handled the sale and Sailing Club on the eastern edifices of the Gateway to India monu- shore of Mumbai, the historic Taj Mahal government. entrepreneur, who was one of the first delivery of the 99m Madame Gu, the fringes of New Delhi is a ment, the Taj Mahal Palace hotel and Palace hotel to the right Robert Harding The terrorist assault on Mumbai to import yachts to the city in the biggest superyacht to be built in the depressing experience for the Royal Bombay Yacht Club – has hotels in 2008 – in which the attackers modern era, and remains one of its Netherlands. It has a squash court sailing enthusiasts, not to risen noticeably in the past five years. arrived in south Mumbai by inflatable keenest yacht racers. and a garage for the owner’s car. Amention environmentalists. Shakeel Kudrolli, a competitive speedboats – had already led to offi- “The one thing that everybody for- Refitting is popular among some The club premises are spick and sailor who founded the Indian Marine cial security restrictions on night sail- gets is that we have the most fantas- buyers who can have a three to five- span, and the dinghies are neatly Federation and the yachting company ing. Then the government classified tic wind. Mumbai is just an enormous year-old boat customised or fitted out stacked on their racks. But what was Aquasail, says he senses substantial yachts as luxuries, and sharply harbour,” he adds. “But there’s a to their specifications, often at a frac- once an idyllic spot on the banks of “latent demand” for yachting and sail- increased customs duties this year for huge problem of culture. Guys here tion of the cost of a new-build. the Yamuna river, a tributary of the ing among increasingly wealthy and imported boats. spend a couple of hundred grand on a The wealthiest sellers can sit tight, Ganges, is no longer the place for a sports-orientated Indians. “There’s a lack of vision, there’s a boat that they don’t use.” for now but that does not mean buy- dinghy race or a pleasant evening “From a commercial perspective, lack of infrastructure, a lack of clear- Mr Kudrolli of Aquasail suggests ing a yacht at the top of the market sail. The Yamuna, its waters reduced we’ve had 20,000 people sail with us in cut policy and regulation,” says Mr that one reason for the limited usage has been painless for all. One broker by irrigation dams and polluted by the past four years, so the desire to go Mongia, bemoaning the fact that of boats is that India’s shortcomings, says he sold a yacht for a client in greater Delhi’s 22m people, has boating is obviously huge,” he says. yachting is considered “an elitist, rich including the absence of marinas, did 2012 for €13m, some €8m less than its become an open sewer and the Aquasail now has 80 boats of various man’s sport”. cause disappointments for “early purchase price four years earlier. club is now rarely used for its sizes – including 40 at the Grand He urges the government to emu- adopters” of the sport. Running such a yacht can easily intended purpose. Hyatt hotel in Goa – and arranges late southeast Asian countries such “There were several things that exceed more than €2m a year, so the Such inland setbacks, however, do activities from sailing lessons and as Thailand and Malaysia that have didn’t fall into place,” he says. “They real loss could have been double that. not tell the whole story. Far to the charters to corporate outings. welcomed sailing and yachting as a probably didn’t realise there are many “He didn’t even like yachting,” says southwest, on India’s busy west coast, The sport was given a fillip this boost to their tourism industries. other factors [beyond the boat] that the broker. “He just wanted to try it yachting enthusiasts and investors in year when Lt Cmdr Abhilash Tomy of “That entire area is buzzing,” he says. make boating enjoyable. You need to and found that it wasn’t for him.” the marine leisure industry say there the Indian navy became the first “The tourism market would benefit be able to go to a place, another From purchase to sale, the owner are signs that the country is finally Indian to sail solo, non-stop and unas- hugely out of this, it would benefit marina, and spend time with friends.” spent only 250 hours on the yacht, so beginning to emerge as a yachting sisted, around the world. the entire coastline.” When the first new marina is finally the cost would have run to more than and boating destination. “It’s starting to happen,” Mr Except in the Andaman Islands, developed, it should have a positive €64,000 an hour. “He thanked me,” The industry is still “extremely Kudrolli says of Indian sailing, citing near the Burmese coast, even visiting effect on the whole business of yacht- says the broker. “He said it had been small”, says Aashim Mongia, manag- a couple in their 70s trained by Aqua- yachts are few and far between in ing. “Once there’s a good test case of like removing a pin from his foot.” ing director of West Coast Marine sail, who have just decided to fly to India, and circumnavigators have for building a marina, there are many Hein Velema, chief executive officer Yacht Services in Mumbai, India’s Croatia for a holiday afloat. years stopped in Galle in Sri Lanka people prepared to invest,” Mr of Fraser Yachts, the broker, says he commercial capital. “But the market Yet the fact that the couple chose rather than risk the horrors of Indian Kudrolli says. expects the brokerage market to stay is growing steadily at 10, 12, 15 per the Adriatic rather than the Arabian bureaucracy. “Yes, they find that As with so many businesses in slow in 2013 after two poor years. He cent a year.” Sea or Indian Ocean points to some of India is too much of a pain,” says Mr India, patience is essential. It is likely urges sellers to price their yachts real- There are so far no large, modern the obstacles that stand in the way of Mongia when asked whether that is to take years before sailors and istically in a market that has been marinas in India, and only about four India’s leisure marine industry. still the case. marine industry pioneers can make starved of finance. “I don’t want to luxury superyachts in the country Both the physical and regulatory The number of small boats Some sailors insist that the problem the most of India’s obvious natural sound negative, it’s just that we’re owned by Indian tycoons. infrastructure needed to sustain moored off the waterfront is as much cultural as bureaucratic. advantages, including its long coast- looking at a new market. There are so But the number of smaller boats marine sports are noticeable by their “What is required is less lazy people, line. “There is a huge, huge potential many boats for sale. For brokers it moored off downtown Mumbai’s absence and even the two new mari- has risen noticeably who are willing to use the boats out there,” says Mr Mongia. “Unfortu- means that we have to work even Colaba district – where the waterfront nas that are planned for Goa have they have bought,” says a frustrated nately, it’s not being tapped.” harder at looking after our clients.” 4 ★ FINANCIAL TIMES THURSDAY JUNE 20 2013 Yachts & Marinas Italian builders craft a future out of adversity

Boatbuilding China is among the new markets targeted as domestic sales stagnate, writes Richard Donkin

Traffic stops and restau- rants empty when a big motor yacht on its low- loader trundles through the small Italian port of Viareg- gio. Cars are cleared from the streets for what is a reg- ular but always breathtak- ing sight. Ships have been built here since before the Renaissance. This ship comes from the Perini Navi’s Picchiotti yard in La Spezia Richard Donkin Vitelli family-owned Azimut Benetti Group. Some of Italy’s most prestigious shipbuilding here feeds Asian market that has been Britannia II would yacht builders have yards in through the economy to the difficult to penetrate. Viareggio: the giant sheds thousands who depend on it “The argument goes that of Benetti, Perini Navi, for their livelihoods and to the Chinese prefer to take Rossinavi, VSY, Codecasa all the subcontractors.” their leisure away from the and Sanlorenzo dwarf the Italy’s traditional ship- sea and sun,” says Mr seafront shops and hotels. building skills persuaded Rossi. “There are 1.3bn peo- showcase the UK Much of the town relies Angelo Bonati, chief execu- ple in China. Even if we can on the industry. Yet teams tive of Officine Panerai, the get a tiny fraction of that of specialists working in watchmaker and sponsor of market it will make a big minister David Cameron suggested HMY Britannia nearby La Spezia, fitting classic yacht regattas, to difference.” Opinion he would back a state yacht if the at Cowes Week out two of Perini Navi have the company’s 1936 For now, the biggest mar- MARTIN REDMAYNE project was self-financed and needed in 1996 (top); Group’s latest yachts under William Fife III-built ketch, kets remain Europe and the no support from HM Treasury. Nelson Mandela the Picchiotti brand, are Eilean, restored in La Spezia. US. Azimut Benetti, which Opponents, including Nick Clegg, the welcomes the Austrian and Dutch. While “The Italian yacht indus- for most of its life has had a sk people to name a royal deputy prime minister, criticised the Queen in South Italy still commands the try can deliver the same similar growth pattern to or state yacht and HMY focus on the “haves and the have Africa, 1995 lion’s share of luxury yacht kind of craftsmanship that Ferretti, has clung to family Britannia will be among yachts” at a time when there are (right) new builds, the market for goes into making our ownership, led by founder the first that comes to many “have nots”. Allsport/Getty skills and expertise is inter- watches. The skills have Paolo Vitelli. The company mind. Since the vessel The argument, which was always national, with strong com- been retained here and believes this is a strong sell- wasA decommissioned in 1997, likely to be made by politicians petition from Germany and that’s important,” he says. ing point where market however, Britannia has become a shy dependent on votes, is a serious the Netherlands. “People here are passionate uncertainty and long lead museum piece in the port of Leith, stumbling block for a project that years of global business tours, the Every country engaged in times from order to delivery Edinburgh. potentially would take a decade or numbers start to make sense. building big yachts has suf- have led potential buyers to Now, with Denmark, Norway, more to design, build and commission. In principle, it would be easy to fered from the slump in look carefully at the finan- Oman, Dubai, Qatar, Saudi Arabia, But if the facts were presented clearly identify a list of companies and sales since the 2008 finan- A clampdown on cial stability of builders. Turkey and most recently Russia all and private finance was available, individuals, in the same vein as Sir cial downturn. Before then tax evasion has Azimut Benetti’s latest operating or planning to commission there is no reason why such a Donald, who could contribute to this the luxury yacht market sales brochure contains a state yacht, is it not time the topic scheme should not be seriously project. The contribution could be in had been riding high, with led to an exodus some impressive statistics: of a British state yacht was again considered by British industry. material or monetary terms – say, demand outstripping supply nil debt, one shareholder, raised for debate? The UK is home to many of the BP for operating fuels, Rolls-Royce and speculative buyers of yachts from €300m in net assets and Back in 1994, Sir Donald Gosling, world’s leading designers and for engines and machinery, and sometimes ordering a suc- Italian marinas €600m in production value. the multimillionaire founder of architects, so a state yacht could perhaps Google as a generous cession of yachts, believing “That says a lot about our National Car Parks, launched a easily become a statement of the philanthropic contribution to UK plc, they would find buyers for business. It is important for serious campaign for a replacement nation’s creative excellence. Britain assisting the country’s search for those they did not need. about the sea and about potential owners to know a for Britannia. Private money was in still has some remarkable expertise business and as a thank you for At Perini Navi in Viareg- their craftsmanship.” brand is secure,” says Gio- place and had John Major been and skills when it comes to such beneficial trading conditions. gio and La Spezia, new According to UCINA, the vanna Vitelli, head of corpo- re-elected as prime minister in 1997, a engineering, shipbuilding and Some 20 companies or individuals builds are still under way, Italian marine industry rate communications. British state yacht was to have been craftsmanship, and these too could each making a £5m donation could but finding fresh orders in a body, the yacht sector gen- This is not to say the commissioned and made available to be highlighted. be part of a trade-off against access tight market is tough and erated €2.5bn-€2.8bn in company has not endured Queen Elizabeth should she need a Britannia II would provide a and use of the vessel for an annual much of the new work 2012, with Italian yards and financial pain in the past royal cabin when overseas. platform for high-tech emerging corporate hospitality event, involves refitting and cus- brands taking a 39 per cent few years. In 2008, at the Despite Britannia’s 43-year service companies to promote our technical depending on how HM Revenue & tomising existing yachts. share of superyacht build- height of the bubble and life, it was only in the yacht’s and engineering excellence around Customs viewed the initiative. Fabio Perini, the paper- ing internationally. the year that the economic twilight years in the early 1990s that the world, sailing into territories that Sceptics and naysayers would making machinery entre- With the internal market crisis hit, turnover was it really started to earn its keep, can be difficult to engage with undoubtedly pour scorn on such a preneur who founded the for superyachts at a stand- €1bn. In 2011, this was with an estimated £3bn of through conventional trade processes. scheme, but at a time when the business, laments the tax still, Italian boatbuilders down to €600m. commercial trade deals and UK Even the yacht’s construction Opponents biggest businesses seem to be interventions that under- are looking to the export The company is bringing order book activity delivered by her could be part of a government recovering faster than most, here is mined the domestic luxury market and a loyal cus- on new ranges and is cau- travels, measured by the apprentice and skills training criticised an opportunity for them to give yacht market. A mooring tomer base. One of the big- tiously confident. “An government’s overseas trade board. initiative. If every interior detail, something back. tax announced in 2011 was gest groups, Ferretti, which owner can come to our yard Before that she produced valuable item, fixture and fitting was “made the ‘haves Britannia II would not only deliver scrapped after protests. But includes iconic brands such and see the yachts in build, regal PR whenever the Queen was in Britain”, who could argue against and have a feelgood factor to the royalists and a levy remains for Italian as Riva and Pershing, is knowing that after three on tour – the ship’s log records the job creation and demonstrable true Brits among us – it would also owners and a clampdown majority-owned by Weichai, years the boat will be deliv- somewhere near 1m nautical miles of quality proposition of such a “pride yachts’ at be a proud icon of British quality and on tax evasion among part of the Chinese state- ered. This is our guaran- cruising around the world. She was of the UK” project? a time excellence. If a great British state wealthy Italian nationals owned Shandong Heavy tee,” Ms Vitelli says. While recognised and respected by many as Britannia II would potentially cost yacht was self-financed and a driver of has led to an exodus of Industry Group. smaller Italian yards that a brilliant marketing tool for Britain in excess of £100m to build, with an when there British exports, surely it is a case of yachts from Italian marinas. Ferruccio Rossi, Ferretti have relied on home sales and its maritime heritage. annual operating budget of £10m- “why not?” as well as “have yacht”. “We are still feeling the chief executive, is excited struggle without an upturn, April 2014 is the 60th anniversary £20m. However, when you consider are many effect of that,” says Mr about the benefits of Chi- more established brands of Britannia’s maiden voyage, and as that estimated £3bn of trade value ‘have nots’ Martin Redmayne is chairman and Perini. “There doesn’t seem nese ownership as the com- with good export markets early as January last year, UK prime generated in the early 1990s in five editor-in-chief of The Superyacht Group to be an understanding that pany tries to break into an remain optimistic.

Identical racing boats cut expense More on FT.com Challenges times in chartering RC44 monohulls and and a higher return,” he ocean racing, especially as efficiency in equipment and Competition Extreme 40 and America's says. “They don’t get much it is not possible to keep training.” Cup AC 45 catamarans. benefit from developing watch and avoid collisions. Having fallen overboard One-design classes Identical boats allow small incremental speed Two boats in the last from a smaller yacht in a offer close finishes teams to compete on level gains or using specialised Vendée Globe hit fishing single-handed coastal race, terms, with the best sailors technologies.” vessels and one an escaped Mr Gautier knows the risk and cost savings, winning. Budgets are lower, However, large one-design navigation buoy, more than of single-handed sailing. writes Rod Newing as competitors share design yachts are only practical for in the six previous races He believes that the risks costs, spares and shore small fleets. The last combined. But there is gen- are reduced by harnessing a crew. This contrasts with Vendée Globe single-handed eral acceptance that sailors race organisation to provide open or box rule classes, nonstop round-the-world will always want to pit safety rules and ensure As professional yacht rac- where each boat is individu- race attracted 20 entries, six themselves alone against thorough preparation. ing has become more com- ally designed, by highly new, eight from the previ- the ocean. As when he fell over- petitive, costs have soared paid designers and engi- ous race and six older ones. Jacques Lehn is chair- board, single handed racing and sponsors have had to neers, within overall rule Alain Gautier, a previous man of the oceanic and off- has a good record of com- look much harder at restrictions. This often winner and safety consult- shore committee at the petitors rescuing them- returns. This focus on costs results in those with the ant for the race, points out International Sailing Feder- selves and each other, as is driving a move to more largest budget winning, that there are 22 Interna- ation (ISAF), the governing navies have become Yacht builders and one-design classes, where especially if they hire crew tional Monohull Open Class body. “The federation does increasingly reluctant to developers have been teams race against each early to ensure a long prep- Association (Imoca) boats not have the power launch expensive long- banking on a healthy other in identical boats. aration period. available for the next race. or the desire to pre- range rescue mis- charter market helping to This can result in often The Volvo Ocean race is “We can’t build 20 new vent oceanic single- sions. rejuvenate an industry highly dramatic, competi- expecting teams to budget boats, even if they are handed sailing,” he R&Q’s Mr Miller that has become swamped tive racing, according to about €11.5m for a one- cheaper,” he says. “It is says. “All yachts, has been pushing for by second-hand yachts Mark Turner, executive design boat, if it is used for good to have different kinds however manned, more self-rescue and dominated by sellers chairman at OC Sport, a two races. This compares of budgets. You cannot should comply capabilities, such as looking for buyers. professional sailing market- with an average of €25m in spend €500,000 on an old with the best kites for dismasted But chartering too has ing and events company. the last race for a unique boat and hope to win, but standards of boats. been forced to discount “These are extraordinary boat that could be used you can get a return from a safety and Mr Turner of OC as prospective charterers sporting and human stories only once, as it would not small budget.” Sport points out drive hard bargains for that make very engaged, be competitive against the Reliability and safety are A multihull, that round-the- what must be far and emotionally charged part- latest designs in the follow- key concerns, especially one-design world races have so away the world’s most nerships for sponsors,” he ing race. Paul Miller, direc- with single-handed racing. 70 yacht many uncontrolla- expensive holidays. While says. “They are high risk tor of underwriting at R&Q Mr Frostad says the new Mark Lloyd MOD ble variables that chartering is growing and the single-handed Marine, which insures rac- Volvo one-design boat is you cannot sell more popular, the supply aspect increases the emo- ing yachts, says these boats intended to be more reliable sponsorship based and choice of boats has tional level.” are worth only 35 per cent than previous boats. on the boat finish- increased, enabling The expensive, one-off of build costs at the end of The nonstop Vendée ing, so most spon- potential customers to Ocean Racing Multihull the race. Globe race is hard on boats, sors plan to get shop around. Association (ORMA) 60 mul- The disadvantage of one- with several mast and their return on Richard Donkin looks at tihulls have stopped racing, design boats is the lack of keel failures usual. The investment before the challenges facing a with the vacuum being innovation and develop- Imoca class recently speci- the race starts. sector for whose top-end filled by Multihull One ment of new ideas, designs fied one design masts and “It’s hard to customers, as one broker Design (MOD) 70 boats. materials and building tech- keels on new boats, to limit budgets but says, “having a good time The Volvo Ocean Race, niques that benefit the reduce the costs and sponsors need to is not enough. They need the fully crewed, round-the- wider yachting industry. increase reliability, while know they can be to come away feeling they world event with stopovers, Knut Frostad, chief exec- allowing the rest of the competitive with a have had the experience of has just announced a one- utive of the Volvo Ocean boat to be individually certain budget and a lifetime.” design class for the next Race, says more develop- designed. Some people have not fail because two races in 2014 and 2017. ment has gone into the new challenged the they didn’t put To read the full story, This follows a number of one design than any previ- whole con- enough money go to: www.ft.com/ other professional one- ous one-off boat in the race. cept of sin- in,” Mr Turner yachts-marinas2013 design classes, including “Sponsors want less risk gle-handed says.