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Investing In Yachts: Will You Sink Or Swim?

Luxury / Luxe Life

Investing In Yachts: Will You Sink Or Swim?

Yachts are a major financial investment and will depreciate in value, so why should you buy one? Here’s how you can actually make money from it.

Written by Xiou Ann Lim on 5 April 2017

Yachts may be the ultimate status symbol for the ultra wealthy – but apart from providing experiential luxury, it is difficult to quantify their return on investment. Especially when they depreciate in value.

According to Wealth-X’s The State of Wealth, Luxury and Yachting report – only 4,476 individuals in the world own a superyacht and the average value of one is USD10 million. But of course, that’s on the high end.

Nick Stratton – Country Sales Manager of Singapore at Simpson Marine, a yacht sales and charter company – says yachts can range from small dayboats to superyachts. He reckons there are approximately 800-1,000 yachts in Singapore alone.

But not only are yachts expensive, Stratton says the general rule when it comes to running and maintaining one is typically 5-10% of the purchase value per year – less if it is new.

Investing in yachts: Will you sink or swim? In Numbers yatch

Taking into account the high cost of buying and maintaining a yacht, is it then a worthwhile investment? If you play your cards right – your yacht may pay for itself and you might not even have to worry about maintaining it.

Investment returns from yacht charter

One way to mitigate financial losses from owning a yacht is to put it up for charter. According to Stratton, chartering out a yacht can range from SGD2,000 (half-day for a catamaran) to EUR80,000 (a week for a superyacht such as a Sanlorenzo 104).

Investing in yachts: Will you sink or swim? yatch Nick Stratton – Country Sales Manager of Singapore at Simpson Marine

Reanna Wang – Charter Development Manager at Simpson Marine – reveals that it is possible to even make a profit from chartering out your yacht: “It depends on the model of the yacht, location to be placed in charter and whether it is an overnight or daily charter.”

Wang discloses that the 42-45 feet models achieve the best charter rate and highest charter occupancy rate possible. Adding that the return on investment per annum can go up to 16%, she says owners also earn 12 weeks of yacht usage.

Wang says it is important to pick a reliable company that manages your yacht and its charter. “There are companies that maximise charter bookings on your yacht without maintaining it well,” she cautions.

“As a yacht sales firm, we charter out yachts as a value-added service to bring profit to the owner – but the most important thing is to maintain the yacht at its best condition so that it maintains its value,” Wang says.

Investing in yachts: Will you sink or swim? sail Nick Stratton – Country Sales Manager of Singapore at Simpson Marine

Yacht maintenance and charter management

Companies such as Simpson Marine can also manage the maintenance of your yacht as their professional technical team will conduct frequent cleaning and check-ups to keep them in the best condition.

Yacht owners can also count on them to promote their yacht to global booking agencies through boat shows– such as the upcoming Singapore Yacht Show happening from 6-9 April at ONE°15 Marina Club in Sentosa – charter shows and advertisements to reach target customers.

Engaging a third-party company to manage the maintenance and charter booking of your yacht costs about 35% of net charter income (after periodical discount offerings to charter clients). According to Wang – this amount covers the booking agent’s commission, marketing costs for promotion of the yachts for charter and costs of servicing charter clients.

Stratton believes that owning a yacht is the ultimate luxury and is “a great way to bring the whole family together – to do business or to escape the hustle and bustle of the city … it simply ends up becoming a whole new way of enjoying life to the fullest”.

Key takeaways

Yachts may be a major financial investment (annual cost of maintenance is about 5-10% of the purchase value) and depreciate in value, but putting them up for charter may be one way to mitigate financial losses.

The 42-45 feet models achieve the best charter rate and highest charter occupancy rate possible. Return on investment per annum can go up to 16%. It is important to maintain the yacht at its best condition so that it maintains its value.

Find a reputable company that can maintain as well as manage the promotion and booking of your yacht for charter.

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