Monday, September 19, 2016

A Pair Trade In The Style Of Davos: Short Ski Chalets/Long Superyachts

Now is the time we juxtapose.
First the long leg from Barron's Penta:

Superyacht Sales Rebound
Research-firm Wealth-X and luxury-yachting specialty company Camper & Nicholsons got together to produce their first-ever yacht report. They analyzed ultra-high-net-worth individuals, defined as those with over $30 million, across five continents to build a profile of a typical superyacht owner. The big news: Sales are up because yacht prices have, in some cases, been cut in half over the last five years. Yacht prices have been drastically cut in the last five years, spurring sales.

Superyachts are usually packed with cinema and music centers, gym facilities, indoor and outdoor bars, and a full-service staff hired to look after the decks, clean, and cook for you and your guests. A superyacht costs $10 million on average, according to the report. Factor in the maintenance costs, dockage fees, insurance premiums, and fuel, and you need at least 10 times that amount in net worth to own one—or $100 million, says Winston Chesterfield, research director at Wealth-X.
Some 4,500 superyachts roam the world today with around 150 delivered to buyers annually. While the report defines superyachts as those over 30 meters in length, the average length of the floating home is 44 meters. Sales have increased since five years ago by 24%, coupled with a decline in prices. Motor yachts, for example, are now around $11 million, compared to $16 million in 2011, and sailing yachts go for around $6 million, half their $12-million-average price tag from five years ago. “If you are dollar based or the equivalent, the euro-priced vessels are far more attractive,” says Michael Payne, CEO of Camper & Nicholsons, attributing the strengthening dollar to the drop in overall prices.

Still, $10 million, just to get a yacht, let alone run it, isn’t chump change. Are they worth the price? People are “valuing time and the experience a lot more,” says Chesterfield, and a yacht is the ideal vehicle to ferry around family and friends with a sense of adventure amidst the comforts of luxury. On a yacht you can both enjoy an outdoor entertainment system under the stars and hook a left towards the Galapagos Islands. A vessel like that can also get you into hard to reach corners of the earth for National Geographic-type experiences. Chesterfield says the report revealed that the wealthy want to “spend more time on their yachts, take trips onshore, and have a look around.”...MORE
But of course.

And from FT Alphaville:

Ski chalets, millennials and Brexit
Knight Frank’s annual ski property review is out.

The good news for the chalet market is… Brits don’t have that much of an influence on chalet prices these days, so Brexit’s been no problem so far:
The UK’s decision in June to leave the European Union has not led to a sudden market downturn nor have we seen sales in their early stage of negotiation fall through. Vendors across Europe are less reliant on British demand, there is a broader cohort of buyers with new wealth emanating from Asia and the Middle East which is filtering into the ‘lifestyle’ market be it ski homes, vineyards or boutique hotels. Summer is usually a quiet period for enquiries and it will be hard to accurately gauge demand until November but enquiries have remained largely static in July and August compared with the same period in 2015.
More concerning, note the analysts, is the declining appeal of ski resorts “as a place to be seen” thing among the millennial generation as a whole.
The challenge the ski industry has is ensuring that it’s widening geographic appeal offsets the expected generational downturn as the snow-loving baby boomers in the west start to decline in number.
Millennials are more transitory in nature, some will show allegiance to one resort, acquire a base in the mountains and return time and again but others may opt to rent in a different resort each season.
We expect most resorts to see marginal price movements in the next 12 months, Switzerland may prove the exception to the rule, particularly those resorts where inventories are severely constrained due to the second home cap and foreign purchaser rules.
So less of this and this:
More of this:...MORE
I'm not sure if the early '70's fondue flashback is from the author's personal collection or is a stock photo from a sweater ad.

A note on engineering: The 'short chalet' leg acts more as a semivariance dampener than a true anti-correlated dirty hedge and would have to be constructed synthetically, which gives rise to all the collateral issues such trades are prone to, but depending on your correspondent gnome I'm sure you could get some kind of action down.