COVID-19 and the brokerage market
An interview with Ocean Independence's Peter Hürzeler about the impact of the pandemic on the brokerage market…
As the uncertainty surrounding the implications of the COVID-19 pandemic continues, there is a growing concern about the impact it will have on the superyacht industry and, in particular, the brokerage market. Speaking exclusively to SuperyachtNews.com, Peter Hürzeler, managing partner of Ocean Independence, reveals that some immediate effects are already being felt.
“We are mostly seeing that LOIs are being maintained, with the exception of a very few that have been cancelled,” Hürzeler comments. “Nothing is moving forward at the moment because nobody can travel to inspect and survey yachts and sea trials cannot be undertaken, so the majority of sales that had been signed prior to the pandemic have been postponed until inspections, surveys and deliveries can take place. This means that all income from sales activity has stopped for the time being, except for those new build projects that can continue.”
Hürzeler adds, however, that the company is seeing a surprisingly positive level of activity in terms of enquiries and discussions from prospective buyers, although acknowledges that it remains to be seen what this means, and whether this will translate to sales, in the long run.
On whether this activity is an indication of a new dynamic forming in the secondhand market, Hürzeler is uncertain. “Based on past experience of periods of crisis, there are always going to be people who need to sell assets and those who want to pick up a deal,” he explains. “But this is not something that you are going to bank on as a brokerage company. After all, you don’t want people to be in financial trouble and you want any yacht to be traded at a fair price.”
“It may still be early days, but we aren’t seeing any signs of distressed owners that are looking for advice on how to be more aggressive on the [secondhand] market in terms of pricing...”
What Hürzeler can say for certain, however, is that there are currently no indications of panic from the market. “It may still be early days, but we aren’t seeing any signs of distressed owners that are looking for advice on how to be more aggressive on the [secondhand] market in terms of pricing,” he adds. “It could be that they are busy with other things at the moment, but we hope that it is because they do not have financial concerns.”
In terms of working with prospective clients, the Ocean Independence brokerage team is not doing anything differently. “We always try to be caring, sensitive and understanding of our clients’ needs,” continues Hürzeler. “Of course, now is not the time to be pushing a client for any decisions about buying a boat, so instead we are continuing to communicate about boats that might be of interest at some point in the future.”
As the outbreak grows in severity, a large number of yacht shows have been postponed or cancelled, and there are also concerns about how the lack of sales-centric events will impact the brokerage business. “Boat shows are not immediately effective in terms of sales, but they do create a certain appetite and emotion for yachts and the yachting lifestyle,” considers Hürzeler. “So, it may have an impact in the mid-to-long term on sales and charter, but not an immediate impact on the sale of yachts. There are other ways of selling yachts and perhaps during this time we will be forced to find out what other formats work.”
As for the long-term effects of the pandemic on the superyacht industry, Hürzeler admits that, while there are many theories and hopes, nobody can know for sure. “I think it will all depend on the economic fallout of the crisis – there could be negative impacts for the industry if there is a long period of recession or there could be positive impacts in terms of how people choose their holidays,” he concludes. “For the brokerage business, it won’t be the biggest and strongest firms that will come out of this crisis the best, it will be the firms that can adapt to the ever-changing situations. So, we have to focus on being quick on our feet and prepared for a number of scenarios.”
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