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. Last Updated: 07/27/2016

Moscow's Wealthy Push the Boat Out

MTPotential buyers taking off their shoes to get a closer look at a boat at the third annual yacht festival on the Moscow River near Gorky Park on Thursday.
President Vladimir Putin may have donated his to a monastery and Roman Abramovich given one to a friend, but it seems like everybody else is trying to get their hands on a yacht. Everybody with enough money, that is.

The rise in yacht sales, and the kind of people who are buying them, speaks volumes about the number and tastes of Russia's rich. The latest vogue is not one for the thrifty.

"For a mid-range yacht it costs $500,000 to $600,000, so of course they need to have a lot of spare cash and not that many people earn that sort of money," said Andrei Amelin, director of Allyachts.ru.

To get a better idea of the yachting phenomenon, all you have to do is make your way out to the third annual Moscow Yacht Festival, which opened Thursday and runs through the weekend. On either side of the Andreyevsky pedestrian bridge crossing the Moscow River to the south of Gorky Park, several dozen boats, from 40-meter super yachts to speed boats, sparkled in the summer sun Thursday at the temporary jetties set up for the event.

The festival, the largest of its kind in Russia, showcases the burgeoning industry, as willowy models in sailor suits chaperone potential customers and the ordure brown water laps dead fish, traffic cones and old plastic bottles against the gleaming hulls.

Kirill Kornelyuk, a 42-year-old property developer, adjusted his captain's hat as he took a break from polishing the stern of his 11-meter yacht, Dusya II.


Vladimir Filonov / MT
Boats for sale tied to docks on the Moscow River on Thursday. Among the highest costs for yacht owners is mooring, which can top prices in Western Europe.
"I sailed directly to the festival from my house in the Moscow region, which is right on the river," Kornelyuk said, the sun flickering across his aviator sunglasses.

"I bought the yacht four years ago for $250,000 and of course I'm looking to buy a bigger one now," he said. "I don't see why anyone can't have one -- if they've got the money."

Apparently, lots of people do.

Industry experts say demand for boats with price tags from $500,000 to $1 million rose by 300 to 400 percent last year. Add to that substantial maintenance costs, exclusive yacht club memberships and pricey moorings, and the boats are not yet accessible to Russia's growing middle class.

Sitting on the deck of a yacht he had recently sold to a 45-year-old businessman for 600,000 euros ($806,000), dealer Artyom Pagchik described what attracts buyers.

"Some people buy them as investments, like you would buy an apartment in Moscow," Pagchik said. "But some people just buy the biggest ones and park them outside their houses as status symbols."

Amelin of the Allyachts.ru web site, which is aimed at helping interested buyers choose the right yacht, said that Russian customers were typically general directors of major firms, directors of large advertising agencies and investment bankers.

The demographics of the Russian market differ considerably from Western Europe, said Guillame Vorspelman, a representative of luxury yacht distributor Premium Boats.

"Russian buyers are usually a lot younger. You are talking about early 30s and late 20s, as opposed to 40s in Europe," Vorspelman said. "Most people at that age in Europe cannot afford boats like these."

With the used boat market that is a fixture in Europe virtually non-existent in Russia, the paying approach and demands of customers are also markedly different from those in the West.

"They want to have the best here. We don't sell as many of the top models in Europe," Vorspelman said. "Here people want all the features. They want the most powerful engines, all the options. They want televisions everywhere, DVD players everywhere -- the whole ball game."

And it's not just the price, but how they hand it over that's different. Russian buyers tend to pay in one lump sum, rather than getting loans for boats, Vorspelman said.

In perhaps a positive sign that money is trickling out of the capital, the market is not restricted to Moscow, and Vorspelman said buyers come from all over Russia and, logically enough, the major cities along the Volga River in particular.

This boom in demand has drawn builders from around the world, with firms from Britain, Italy, the Netherlands and the United States showing increasing interest entering the Russian market, said Igor Martinov, editor of Yachting magazine, an industry publication with a circulation of 65,000.

"The Russian market is approximately the same for those producers as the United Arab Emirates," Martinov said.

Although most yachts are imported, in the larger, super-yacht class, domestic producers are market leaders.

Working out of a shipyard just across the Moscow River from the Kremlin, Timmerman Yachts builds 25- to 45- meter boats that run from $5 million to $40 million, company president Dmitry Mitronenkov said.

With 12 orders already on the books until 2009, Timmerman ranks in the top 10 in the world for total meters being built, Mitronenkov said. By 2011, he hopes to produce 12 boats per year.

These boats aren't threatening to render the city's waterways as congested as its roads, since most of them end up sailing in the Mediterranean and Caribbean, Mitronenkov said. Only 30 percent of the yachts produced stay in Russia.

With Moscow so far from the sea, its rivers, reservoirs and canals have become the yachting hotspots.

"You can even sail from Moscow to Italy in three weeks, along the Volga River," said Vorspelman of Premium Boats. "There are opportunities enough, but people here don't understand what boating is."

They probably know what bills are, however. For larger boats, annual operating costs can run as high as 10 percent of the yacht's value.

Among the highest costs is mooring. Prices can exceed those in Western Europe, and a handful of elite yacht clubs have sprung up in recent years to cover demand, although they are still relatively small. Burevestnik, north of the city, is the country's largest club, but has only 250 members. With its own helipad and guarded perimeter fence, the club is a paragon of exclusivity.

Prospective members have to be nominated by two people already in the club, and mooring fees can set you back more than $50,000 per year -- higher than those in billionaire playground St. Tropez, marketing director Olga Ovchinnikova said.

"Some of our clients are top managers at UES and Gazprom," Ovchinnikova said.

One Russian magnate seems bent on topping them all. The Wall Street Journal reported in January that Roman Abramovich was building the largest yacht in the world, a 160-meter monster the length of 1 1/2 football fields, to compliment the three mega-yachts he already owns.

A Just Russia recently introduced a bill in the State Duma calling for a special tax on luxury items like country estates, personal jets -- and yachts. The bill would seem like a good sell to Russians angry with the lifestyles of the country's rich, but Yachting magazine's Martinov said their attitudes weren't always critical.

"On the one hand, there is envy and a negative reaction," Martinov said. "But there is also the romantic image of yachts that stirs a sense of pride. Russians are very proud of the fact that Abramovich has some of the biggest yachts in the world."

Standing on the walking bridge above the yacht festival, Lyudmila held up a pair of binoculars for her grandson, Maxim, to peer through.

"We all understand that these things are too expensive for us and that all we can do is look," she said, refusing to give her surname. "My grandson likes these sorts of toys, so I brought him to see them. Maybe his generation will be able to afford things like this."

For now, most average Russians will only end up owning yachts through acts of divine or official intervention.

Back in 2005, Putin gave the Timmerman-made yacht on which he had celebrated St. Petersburg's 300th birthday celebrations in 2003 to the Valaam monastery, located on an island in Karelia, north of St. Petersburg. Complete with elegant cream carpets, upholstered chairs and a wooden sun deck, it is now captained by one of the monks.