#Investments — 17.09.2020

Millennial Jet Set

Arnaud Tellier, CEO Asia Pacific, BNP Paribas Wealth Management

Superyachts and business jets are passion investments for the super-rich, and both appeal to Asia’s new generation of high-flyers.

Jet

At BNP Paribas Wealth Management, we see a younger generation of UHNW individuals transforming the broader luxury landscape in Asia. This change is marked by a move from accumulating tangible assets to pursuing rare, tailored experiences.

EVOLVING YACHT INDUSTRY LANDSCAPE

Today, owning a superyacht is not about making a statement, but maximising the way an owner utilises their resources and time, both of which are scarce. And of course, the memories created on board will last long after returning to shore.

A superyacht is a floating piece of real estate. It enables one to work, have fun, and gather with family, friends, and business partners in a private environment – all the while enjoying a five-star, world-class service comparable to the best resorts and Michelin-starred restaurants.

The Asian superyacht market is dominated by models from 30 to 35m. Superyachts of 40m and above are rare in Asia. Having said that, we see more and more Asia Pacific tycoons buying yachts of 50m and above and docking them in the Mediterranean, the Seychelles, and the Caribbean.

Hong Kong is the largest hub for yachts in Asia Pacific, supported by mooring facilities including the Aberdeen Marina Club, Hong Kong Gold Coast and the new Lantau Yacht Club.  

It has been observed that more European-based yachts are visiting Thailand (Phuket in particular) and Indonesia. Australia and New Zealand could hold increasing appeal around the America’s Cup early next year, while the Summer Olympics in Japan could draw international yachts as well.

There are still obstacles for the development of yachting in Asia, such as the stringent regulations for cruising from one country to another, complexities around chartering, and the lack of marinas and infrastructure for mooring and refit.

At an industry level, more lobbying is necessary to convince governmental bodies to ease restrictions and further invest in infrastructure. The impact of the COVID-19 pandemic may bring some positive changes.

In a recent move, the Thai government is exploring the potential of high-end foreign superyacht tourism. Such luxurious tourism may generate substantial revenues, from the use of local suppliers, to high-spending UHNWIs patronising local stores and resorts.

GROWTH AND DEMAND IN THE ASIAN BUSINESS JET MARKET

Southeast Asia is still seeing growth in total numbers of business jets, while the market has stabilised somewhat in Greater China, where it is being driven mostly by replacements of existing jets.

According to a 2019 fleet report published by Asian Sky Group, the total number of regional aircrafts (including those in India) was 1,213 at the end of 2019, of which 518 were based in Greater China.

Superyacht owners in Asia are very discreet and rarely publicise their ownership. Confidentiality is part of the experience and the value proposition.

This is also true for jets. Asian clients are notably keen on buying long-range and ultra-long-range models. In many other markets, customers would initially start buying a small jet or even a turboprop to begin with, and then gradually step up to bigger models. In Asia, we have seen many first-time business-jet owners buying at the top end of the market.

New models such as the Bombardier Global 7500 and Gulfstream G700 are changing the game. With larger cabins allowing for four, or even five separate “living spaces”, they also have a longer range than previous models. Dassault is also introducing the “ultra widebody” business jet with its new 6X. Demand for these aircraft has increased in the last five years, even as the trade war changes the market.

Seletar Airport in Singapore and Hong Kong International Airport are popular for business jets, and the new airport in Beijing is also expected to become a hub. Jet activity is increasing in Southeast Asian countries such as Thailand, Vietnam and Indonesia.

Interestingly, we have recently seen consolidation of, and investment in, business jet maintenance and repair operations (MROs) in the region. Jet Aviation expanded its presence by acquiring Hawker Pacific’s MRO two years ago, Dassault Aviation took over ExecuJet’s APAC MRO early last year, and Bombardier has been investing massively in a new service centre in Seletar.

Arnaud Tellier

“We are actively playing our part by offering carbon-offset programmes, impact investment solutions, and promoting and supporting NGOs active in these fields through a 'tick and donate' initiative. ”

ARNAUD TELLIER

CEO, Wealth Management Asia Pacific

MILLENNIALS ARE THE FUTURE

BNP Paribas Wealth Management finances the upper end of the business jet and superyacht markets, catering for superyachts of 40m and above and medium to ultra-long range business jets.

Our clients generally have a net worth of US$500 million or more. We are very selective in the clients and the assets we finance, and we operate in a niche market, completing a handful of transactions each year.

We have worked with several next generation UHNWI, who like their parents, are investing in business jets and flying privately.

The situation for yachts is a little different. Most of these clients received a Western education and have since introduced the yachting lifestyle to their parents and enjoy family time on-board.

Millennials are truly concerned about global warming, CO2 emissions and ocean preservation. From an industry perspective, the business-jet manufacturers and superyacht builders are working hard on their value proposition to attract millennials. These manufacturers and shipyards want to be part of the solution, not the problem, and they are constantly innovating to produce more environmentally-friendly products.

As a leading global private bank, BNP Paribas Wealth Management is committed to green finance. We are actively playing our part by offering carbon-offset programmes, impact investment solutions, and promoting and supporting NGOs active in these fields through a “tick & donate” initiative.

When it comes to financing environmentally-friendly yachts, fuel-efficient diesel electric yachts, or explorer vessels having a scientific and educational purpose, BNP Paribas Wealth Management is willing to go the extra mile.

BNP Paribas Wealth Management has accumulated vast experience in yachting over the last 15 years, and we are willing to share this knowledge of the industry with our clients and introduce them to the leading shipyards, brokers, and yacht management companies in Asia and Europe.

BNP Paribas Wealth Management understands that a superyacht or business jet is more than just an asset – it is a personal expression of taste, style and success. By working closely with our valued clients, we have gained the trust and respect of UHNWIs across the world.

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