The declining inventory of good brokerage boats and the dearth of imminent new build slots at good shipyards have certainly been the leitmotifs of 2018, and they were very much reinforced recently, over the course of the spring Spanish boat shows. The former, however, appears to be having a more positive effect as a catalyst on resale movement.
“I think the fact that there are fewer options available has actually improved the market conditions because the difference between initial asking prices and selling prices has definitely reduced,” explained Richard Lambert, head of sales at Burgess, who described the current market as being in a “generally good” state.
He clarified that it’s not necessarily because the best product has disappeared off the market. Instead, it’s a “hangover” from the global financial crisis, when the new build market began to contract. The Superyacht Intelligence Agency’s data shows that in 2007 and 2008, the market was delivering 250-plus boats per year, triggering a sizeable influx of product to the market for brokerage-boat buyers to feast their eyes on.
However, by 2013, this output had dropped by roughly 40 per cent, to annual delivery figures of around 150 yachts, where it has stayed ever since, resulting in a current market with little to show in the way of relatively new brokerage boats.
"I wouldn’t say it’s a ‘seller’s’ market but a ‘fair’ market; prices are holding firmer and the boats that are priced properly are moving."
Frank Grzeszczak Jr, sales consultant at IYC, said that because of the decline in inventory, the decent yachts today are actually priced properly. “I wouldn’t say it’s a ‘seller’s’ market but a ‘fair’ market; prices are holding firmer and the boats that are priced properly are moving.
“It’s a big shift from two years ago, when boats were sitting on the market and just dropping and dropping in price – until they had been discounted by 40 per cent. The ‘sit and wait for a deal’ mindset has changed into an ‘I need to take advantage of this while it’s available’ mindset.”
Grzeszczak Jr said that it’s “a waste of time” for brokers to take on listings with inflated prices under current market conditions. “Brokers are being more realistic, clients are being more realistic, everyone is being more realistic. Our clients’ businesses are generally doing very well and their behavioural change is reflected in a more confident market.”
Darrell Hall, partner and sales broker at Yachtzoo, has noticed a number of buyers “completely disregarding” asking prices set by sellers. “They’ll focus on two or three boats and pretty much throw numbers out there to try to find the most serious seller, or the best vessel to negotiate on."
He added: “We still have clients who are a couple of years behind the trend; guys who are asking us to find them the good deals, but there aren’t any because they have all been taken. Brokers are having to work twice as hard and research a lot further – way beyond the norms.”
"We still have clients who are a couple of years behind the trend; guys who are asking us to find them the good deals, but there aren’t any."
Raphael Sauleau, CEO of Fraser, said he has noticed that a number of clients have been going directly to the shipyards and not using brokers for new build projects. He said, “When you negotiate on such an asset, you need guidance, and you need it from a guy who does not just sell you a boat but gives you the right advice and takes you to the right shipyard.”
Grzeszczak Jr has a predominantly Latin American client base and considers this demographic to be one of the market’s biggest opportunities, although perhaps more so on a personal level. “I feel strongly about the Latin American market at the moment. There is a lot of confidence there and a lot of money, and it’s a family-orientated culture - and the perfect place to get your family together is on a yacht. They like newer boats; their priority would be for a one-year-old boat, but because there are none available they are trending towards new construction projects.”
Grzeszczak Jr pinpoints the 40 to 60m category as the one where yachts are selling the fastest – and he believes there is “a hell of an opportunity” for brokers to introduce their clients to shipyards and work on new build projects in that size-range.
Contrastingly, Hall believes that the greatest market opportunity for brokers is for those with buyers in the 60m-plus range. This is because there is a smattering of great yachts for sale and, unlike years gone by, a great variety. In fact, Hall said that he had never seen a brokerage boat line-up like this current sector of the market.
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