Smart invest
Sail All the way!
Having bought luxury villas, private jets, a hi-end luxury yacht is what the rich and influential are now investing in.
L July - September 2013  
Luxury villas and private jets are a thing of the past. If luxury is about indulgence then owning yachts has caught the fancy of the rich and the famous in India lately. These are increasingly being preferred for the super investment returns they offer to their owners. Therefore, people are not only buying luxury yachts but looking at them as suitable investment options. Also, the luxury travel market is not limited just to the metros anymore; even Tier II cities and nonmetros are contributing to this business.
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This phenomenon is neither unexplained nor unexpected. For we have over 7,500 km of coastline and around 15,000 km of navigable inland waterways. And
enough number of the superrich who can indulge in these luxury yachts. Our country has had a long tradition of sailing and many active rowing and boat clubs have been in existence ever since these yachts caught the fancy of maharajas and governors in early 1800s. In fact, we have the third oldest yacht club in the world, the Royal Bombay Yacht Club. This club came up in 1846, and ever since that time the luxury boats and yacht market has been steadily rising. But the trend of investing in luxury yachts took off four years back, during the 2009 Samira Mumbai International Boat Show. Though held in the midst of the recession, the boat show recorded a remarkable attendance and received a sizeable axisbank.com | 23
Smart invest
Reasons to invest Lifestyle Most people buy yachts to increase the luxury quotient in their lifestyles as well as to make a style statement.
Need There are many buyers based in Mumbai, Kochi and other areas near inland water bodies where buying a luxury yacht not only indicates their lifestyle but it also is a great investment to travel to their second homes across water bodies. It saves much-needed time and fuel cost compare to travelling via road. Hospitality A luxury yacht is a great way to expand your hospitality vertical, buying a yacht under your hotel/ resort property saves a lot of custom duty. The yacht propels your waterfront resort into the next league of providing add-on services to domestic/ international tourists.
A yacht can be used
July - September 2013
for business meetings, entertaining VIPs & obliging potential business partners
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number of luxury yacht orders, both for commercial and personal use. Yachts are bought both by individuals and corporate houses in India. While individuals purchase them for personal use, corporate houses use them as commuting vessels for its top executives or for leisure. According to a study conducted last year, there are nearly 500 registered boats in India and of these, 200 are luxury yachts and over 250 speedboats. Conventionally, luxury yachts are 25-m or longer. While the number of luxury yachts in the 80 ft-plus category is limited owing to their high cost, the number in the under 80 ft category is an astounding 125. This amounts to more than 70
per cent of the total market of `650 crore. In fact, the current revenue of the country’s pleasure boating industry is anywhere between `1.5 billion and `5 billion. On an average, the price of a luxury yacht starts from `1.8 crore and goes up to several crores but it is not just the fancy price tag that attracts investors. Yachting has been popular throughout the world with countries like Singapore, China, Indonesia, Sri Lanka and Maldives having benefitted immensely from the opportunities created by this segment. And India is set to benefit now. One of the main reasons for the same is the geographical location of a country which should aid sailing activities, something
which is in abundance in India. There are enough locations for using these luxury yachts with tourism opportunities like Surat, Mumbai, Goa, Karwar, Kozhikode, Chennai, Puducherry, Visakhapatnam, Puri, Kolkata and Port Blair. “Apart from a boost to the national and international tourism sectors, there has been a rise in revenue generation through custom duties, sales and service taxes on import of capital goods for infrastructure related with the sector,” says Shashikant Pushpakar, marketing head (commercial & leisure boats), Esmario Marine. Another reason for this sudden upsurge in people investing in luxury boats is the opening of the first full-
fledged marina in India, Kochi International Marina recently. Owned by Kerala Tourism Development Corporation, the marina provides berthing facilities for 34 yachts. Also, the marina is close to the international maritime route at the southwest coast of the Indian peninsula with favourable conditions and minimum tidal variations throughout the year. Before investing in a yacht, one needs to keep an important factor in mind i.e. its potential for charters. With a low usage rate and maintenance cost as high as 5 per cent per annum of the price of the yacht, owning one would be all about paying hefty prices and taxes every year. By chartering a yacht for
around 10-12 weeks a year, owners can comfortably pay the operating expenses for a year. For example, Vijay Mallaya of UB Group, charters his mega yacht, which costs about $700,000 a week. The license to charter is obtained at the time of purchase of the yacht when it is registered with the concerned authorities in India. The only drawback, at present, is that Indian financial institutions are yet to adopt marine financing options. Conventionally, a term loan is provided to the owner but there is no loan facility against yachts or boat loans except for a select few. However, a few Indian dealers help their clients by organising the finance and insurance formalities from foreign shores.
Real Estate Developers Lately, many real estate developers are working on developing residential properties near waterbodies providing a serene living culture like in Surat, Ahmedabad, Mumbai, Goa, Kochi, Kollam, Mangalore, Chennai, Puducherry, Vizag and Kolkata. Having a water front property and a luxury yacht from increases the desirability of the property. Charter Business You can buy a luxury boat for your own usage and when it is not being used it can be given on charter which will bring revenues to cover the cost of boat crew and engine maintenance. Water Sports Centre The young, discerning and well-travelled Indians are increasingly getting exposed to international water sports centres. These days, owning a business or a water sports centre is a viable opportunity. Corporate Buying Buying a yacht is a good corporate investment opportunity too. A yacht can be used for business meetings and entertaining VIP dignitaries. Cruising on a private yacht provides ultimate feeling of being above the rest of world. Info courtesy: Esmario Marina
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