It is difficult to buy, impossible to sell: in the West they do not know what to do with the superyachts of the oligarchs of the Russian Federation

More than two years after Russia’s invasion of Ukraine, the global yachting community is still in the dark about the future fate of luxury superyachts owned by sanctions-hit Russian oligarchs. Business Insider writes about this.

As noted in the publication, the war against Ukraine forced many states to impose sanctions against the richest Russians, including the seizure of their superyachts worth hundreds of millions of dollars. However, it is not clear whether it is possible to sell or find a buyer for these yachts, which leave the ports where luxury ships usually dock “floating”.

“The problem with Russian superyachts is getting worse,” said a luxury yacht broker speaking at the Palm Beach International Boat Show last week. Given the sensitivity of the topic and the general reticence in the industry, most chose to remain anonymous.

Russia has long been a leader in the superyacht market. According to a report by SuperYacht Times magazine, before the invasion of Ukraine in August 2021, Russian yacht owners had the second largest share of ownership of ships over 40 meters.

They accounted for 16% of total new superyacht purchases in the past decade and are known for their penchant for extravagant interiors and unique features. According to an anecdotal story, an oligarch ordered a large safe in the ship owner’s cabin to store rifles, which he then used to shoot clay pigeons on deck.

However, these sales stopped due to sanctions imposed on the oligarchs. At least a dozen superyachts worth over $1 billion were detained. Now the fate of these ships is uncertain.

Hard to sell, hard to buy

As noted in the publication, Russian superyachts subject to sanctions are difficult to sell or buy. First of all, most of the yachts were not arrested, but “frozen”. This means that Russian owners cannot use or take them, but they are not technically owned by any foreign government and therefore cannot be sold without special permission.

Earlier this month, federal prosecutors asked a judge to allow the sale of the 106-foot superyacht Amadea, which is rented in San Diego for $922,000 a month.

“I’ve been asked this question a few times, but so far the only answer we can give is that we don’t know how this situation will be resolved,” says another superyacht broker.

Although brokers have expressed interest in the Amadea yacht, most of the ultra-rich or their brokers do not want to go near the ships, even if they receive government permission to sell.

“What will it look like if you buy a Russian yacht?” asks Julia Simpson, a broker at Monaco Thompson. “While this is completely legal and normal, it raises many questions, such as where the previous owner got the money and whether this will affect the new owner’s reputation.”

There are also legal risks because it is difficult for the government to determine who actually owns the yachts.

“Oligarchs often use complex schemes through trusts to own expensive assets through offshore companies and hide their true ownership,” explains former federal prosecutor Joshua Naftalis, who now works for Pallas Partners.

Even if the owner turns out to be the government, this will largely depend on the court’s decision. For example, a Russian whose yacht was seized by the French government won a case in 2022 and regained access to his ship.

“Buying a yacht is a complex process,” says Ralph Dusert, head of analytics at SuperYacht Times. “There is a real risk that the former owner will sue you to get his boat back.”

He gives the example of the 82-meter Alfa Nero, which Eric Schmidt planned to buy for $67 million at an auction held by Antigua and Barbuda last year. But after attempts to block the sale, he abandoned the idea, probably fearing possible legal problems.

“When the reason for the sanctions is eliminated, which may happen, Russian yacht owners will try to return their ships,” Simpson said. After all, “the government won’t buy them.”

If sanctions are lifted, the value of yachts will decrease, because unused ships will lose value faster than actively used ones.

“These yachts need to be maintained to maintain their value,” explains another broker. “Storing at anchor with a temporary crew does not help maintain the condition of the ship.”

And for Russian shipowners who have managed to retain control of their ships, it will not be easy to get rid of them in the future.

The publication summarizes: “Therefore, the richest Russians are “stuck” in the few countries that allow them to engage in sailing, for example, the Maldives, Montenegro and Dubai.

Recall, in the United States, the owner of a $4.5 million Lamborghini yacht threatened a private wharf employee after being told he couldn’t be there. The Thakore employee took out $100 bills from his wallet and threw them at him. He added that the businessman harassed him. This moment was not recorded on video.