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When Russian billionaire Roman Abramovich ordered German shipyard Blohm + Voss to build him the world's biggest yacht, the initial price was said to be a relatively modest £340 million. By the time the Eclipse is to be delivered, the price is estimated to balloon to more than £800 million, or more than $1.2 billion, according to Wired magazine.
What makes the yacht so expensive? For one thing, it is 557 feet long, roughly half the length of an Enterprise-class aircraft carrier. For another, it features not only the usual battery of luxury conveniences, such as hot tubs, helicopters and lavish state rooms, but it also reportedly houses a missile-defense system, a laser system designed to prevent snooping paparazzi snapping photos of Abramovich and his guests, and a minisubmarine that doubles as an escape pod.
It won't be Abramovich's only yacht, either. In addition to the Eclipse, which is currently undergoing trials and is expected to be delivered later this year, he owns three others: the 337-ft. Pelorus, the 282-ft. Ectasea, and the 161-ft. Sussurro.
At a time when many wealthy individuals have decided—or been forced—to scale back their spending, there are still plenty who appear to have ratcheted it up in the face of the global economic downturn. Records are being set for big-ticket items, ranging from yachts and homes to paintings and even bicycles.
"The clients are still out there," says Bo Franch-Mærkedahl, chief executive of Scandinavian luxury design firm Aurumania. The company makes the world's most expensive bicycle, an €80,000, 24-carat gold two-wheeler studded with crystals. The announcement of its bike appeared disastrous as the company launched just days before the global stock market crash. Franch-Mærkedahl says the sudden turmoil made him nervous, but he has so far sold five of the 10 limited edition bikes, and profits have beaten expectations.
A glimpse at the broad economy shows that in 2009, consumers cut spending, causing retail sales to drop 6.2% year on year in the U.S., according to figures from the U.S. Commerce Dept. The wealthiest were not immune to the recession—Forbes reported in March 2009 that the average net worth of the world's billionaires dropped 23% from the previous year, to $3 billion, although it has rebounded to $3.5 billion in 2010.
These losses are enormous but not necessarily crippling to a billionaire's ability to buy fine art, fancy cars, jewels, and costly champagnes. For people who have the passion and means to collect, "the sky is the limit," says Helena Newman, co-vice chair of Sotheby's (BID) Impressionist & Modern Art department worldwide.
The art market, too, has seen some blockbuster sales. Auction houses such as Sotheby's and Christie's saw overall sales slip last year, but there were a few bright spots. In February 2009, Christie's set a record for auctions in Europe with the collection of late fashion designer Yves Saint Laurent, which fetched nearly $443.1 million. It also sold Raphael's Head of a Muse, a black chalk drawing on paper, for $47.9 million in December, the most expensive work on paper ever sold. The bidder remains anonymous, although the U.K.'s Guardian wrote in February 2010 that the buyer may have been billionaire Leon Black, founder of private equity firm Apollo Management.
This year Sotheby's London achieved a landmark for the most expensive statue when it sold Alberto Giacometti's Walking Man 1 for $104.3 million in February.
"Good quality art is seen as something that will stand the test of time and is more immune to the ups and downs of the wider economy," says Newman.
Conor Jordan, head of Christie's Impressionist & Modern Art department in New York, says the problem during the recession was not a slump in demand but a lack of confidence among sellers, which created a shortage of top-end objects in the market. "Seasoned buyers never went away," he says.
The high-end luxury market is expected to improve this year. Jordan expects Pablo Picasso's Nude, Green Leaves, and Bust, a rarely seen work completed in 1932, to sell for $70 million to $90 million in May.
It's not just the normal big-ticket items, such as yachts and fine art, that are commanding eye-popping sums. Designer Stuart Hughes' £1.93 million ($2.97 million) gold cell phones and £1.5 million ($2.3 million) diamond-studded televisions for PrestigeHD may sound like relics from the boom years, but they are recent launches—and anonymous buyers have been showing interest.
The passion for exclusive objects comes from a desire to stand out from peers, Franch-Mærkedahl says of many of his clients. These are people who are either avid collectors or who "just love to be on the edge"—in both good times and bad.
And then there are those who really need a minisub and anti-paparazzi defenses.
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