$20m to invest??

15th March 2011

Recently released industry research across the private jet sector depicts the view that we are currently in a buyers market. Key factors driving this are the high levels of stock in the market, coupled with low demand for aircraft. As an example a Gulfstream V fetching $45 million in 2008 would now struggle to break the mid $20 million range today. Prices are continuing to fall though this price descent is slowing.

With many being forced to sell or handover their prized assets, investors are seizing their opportunity. In many cases prices of private jets have more than halved since 2008, as inventories of aircraft are now higher than ever before. With such low interest rates on borrowing and finance, clever investors will buy now and take advantage of this whilst the value of their aircraft grows ahead of inflation in the years to come.

So when the market picks up, who is going to buy these machines? Well, on the corporate side, it is estimated that the demand for private aircraft is two years behind the cycle of corporate earnings, meaning in the next year, the demand should begin to increase dramatically after the major collapse of the market just over a year ago.

Then there is the private wealth, primarily from Brazil, Russia, India and China, who seems to be producing the majority of new milli/billionaires. Increasingly these regions are the emerging private jet markets in the world. These developing countries will become hot spots for private aviation, possibly overtaking even the USA.

All of these factors mean that the market, whilst not out of the low yet, is almost certain to get back up to, and possibly exceed the levels it was at pre crash, meaning high flying times for the business jet industry!

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