Yacht sales are dropping as negative press tied to sanctions against Russian oligarchs leaves potential buyers leery, experts say

• The high-profile seizure of assets from Russian oligarchs is causing superyacht sales to drop.
• Two experts told Insider the negative press around superyachts has made prospective buyers hesitant.

Sanctions against Russian oligarchs and the high-profile seizure of their assets is dampening superyacht sales.

In the past month, European countries have seized dozens of superyachts linked to some of Russian President Vladimir Putin's closest allies in response to Russia's invasion of Ukraine. According to experts, the negative press around the superyachts has started to make potential buyers leery.

"These luxurious megayachts very quickly became the main focus when the sanctions started," Denis Suka, a private yacht broker who runs the popular luxury yacht-focused Instagram account @theyachtmogul, told Insider. "For the yachting industry it was quite shocking to see.

He continued: "The sales were up, but now they're dropping. Suddenly, I had people who had admired these Russian yachts attacking them on social media."

Bad press gives buyers second thoughts

Prior to Russia's attack on Ukraine, the pandemic helped boost yacht sales among the ultra wealthy as they sought more privacy and isolation. Last year, the number of yachts sold hit an all-time international record, according to data from VesselsValue.

More recently, however, there have been reports that the production of numerous superyachts has been paused amid G7 and EU sanctions that ban the export of luxury goods to Russia.

One luxury yacht maker in Germany has even begun sending out questionnaires to clientele to check the ownership of vessels in an effort to comply with local authorities.

Insider's Hayley Cuccinello previously reported that the European yacht market is bracing for a squeeze as Russians move to take their business to Dubai. Raphael Sauleau, CEO of Fraser Yachts, told CNN European buyers have expressed hesitancy since Russian invaded Ukraine.

Marcela de Kern Royer, a yacht consultant and representative for superyacht builder ICON Yachts, said the sanctions have had a direct impact on superyacht sales, but not for a lack of Russian buyers. She noted that Russian owners make up about 10% of the existing yacht market and 18% of sales for new builds.

She said the real impact has been around bad press associated with superyachts.

"A lot of people might not want to buy a yacht right now because the image is wrong," she told Insider. "A lot of Americans are cancelling charters in Europe for peak season. The entire industry is trying to figure out how to clean up the image, this negative correlation between oligarchs and yachts."

Economic concerns linger

Suka told Insider he believes the global economic uncertainty that has been fueled by Russia's attack on Ukraine has also made buyers hesitant to shell out money for a yacht purchase — a $1 million to $500 million expense.

What's more, Suka said yacht prices are on the rise due to surging fuel costs, as well as rising prices for the commodities needed to build a yacht. In March, aluminum prices hit an all-time high, up over 50% from the previous year. Meanwhile, fiberglass prices have also been on the rise.

"For some yacht builds, we could be looking at a price increase over $100,000 and if this war continues that price will be even higher," Suka said.

Ultimately, Kern Royer said the sanctions could have a cascading impact across the entire yacht industry.

"What many people fail to understand is that these superyachts are not just some toy for the rich," she said. "An entire ecosystem depends on these yachts. They are responsible for employing thousands of people from designers to naval architects, shipbuilders, to captains, crew, and marina staff."