Yacht watch part 2

Somedays, I must admit, there’s a lack of inspiration for a new storyline. Fortunately, much like The Young and the Restless, there’s enough good stuff in our archives from days gone by to keep this space afloat for yet another day.

With the Dow touching bear market territory last week, revisting the global yacht market as a recessionary & capital flow test seems appropriate (see prior post “Yacht watch” September 2-2007). As you may recall, we last treaded onto this territory in September. Oil was US$70/barrel at the time. Today, north of US$140.

What’s this all mean for the uber-rich who propel the global yacht market? Not much, by the looks of it.

In March of 2007, there were 53 new yachts >150 feet in length available for purchase at Yachtworld.com (see prior post “Blackstone eyes brass ring“, March 16-07). In September 2007, 62. There were 231 ships of this nature available last September if you included the used versions; a decrease from the March 2007 figure, however.

Today there are 66 new boats available, with the most expensive proposal being yours for just US$549.5 million. I guess they didn’t want to come out and ask for a flat US$550 million. Add the used category, and the number hits 255, which isn’t a dramatic increase over the 231 on the market last September. But it’s a noticeable increase, particularly given the drop between March and September 2007 of the number of boats available, when credit was still flowing and institutions such as Citigroup (C:NYSE) were telling their investors that the first US$10 billion of new capital they raised was all that was required to solve the world’s problems, so to speak.

10 months has passed, the price of oil has doubled, Citigroup’s stock is down ~50%, and the global yacht market appears to be hanging in there. Another datapoint: a stunning Monet sells for US$80 million at auction. And even though foreclosures on 20, 30 and 35 foot boats are at a 20 year high, there’s been no similar spike in the mega yacht market. As Colin reminds me, it appears that there are still plenty of new multi-billionaires being minted in Russia and elsewhere to keep the high end boat market going with the tide for some time to come.

At the same time, the U.S. is expecting more than a million home foreclosures this year.

If the U.S. economy wasn’t so hard up, perhaps someone would do the right thing and pay US$13.8 million for the USS Williamsburg. She was the floating White House ‘Presidential Yacht’ for President Harry S. Truman, but has fallen into disrepair according to the Trust that now owns it. It’s a bit of a fixer-upper, however, with an estimated 33 million Euro bill awaiting the would-be owner who wishes to return her to her former “splendor”.

The gap between real life and “la-la” land is remarkable.

MRM