Bro­ker­age 2017 a Change of PaCe for the good

Our an­nual re­port on the bro­ker­age in­dus­try shows shift­ing mar­ket trends—many in fa­vor of Amer­i­can buy­ers. march 2017

Yachts International - - Sternlines - By kim kavin

The pres­i­den­tial elec­tion of 2016 had all the world’s eyes on Amer­ica, but for spring 2017, a good num­ber of Amer­i­cans may be turn­ing their gaze to Europe. That is, if they’re in­ter­ested in fer­ret­ing out some se­ri­ous bro­ker­age deals.

Three bro­ker­age mar­ket trends ap­pear po­si­tioned to in­ter­sect for spring 2017: the U.S. econ­omy’s re­cov­ery, the weak­en­ing euro and the bullish at­ti­tude be­ing stoked by the prom­ise of busi­ness-tax cuts un­der Pres­i­dent Trump. Taken to­gether, these trends mean Amer­i­cans might be poised for a spend­ing spree on solid-qual­ity bro­ker­age yachts.

“Amer­ica re­cov­ered first and did stim­u­lus first, and then, Amer­ica is Amer­ica—the most pow­er­ful econ­omy in the world,” says bro­ker Matt Al­bert at the Monaco of­fice of Yachting Part­ners In­ter­na­tional. “All through that same time, the euro was re­ally ex­pen­sive. It was only peo­ple sit­ting on stupid amounts of money who could af­ford to buy a Lürssen or a Fead­ship or an Oceanco brand-new. Now, those or­der books, prob­a­bly half of them are Amer­i­cans. The op­por­tu­nity is huge: You can get more for your dol­lar now. It will, for sure, af­fect bro­ker­age as well. You’re go­ing to see the Amer­i­cans go­ing to Europe now the way we were see­ing the Euro­peans and Aus­tralians go­ing to Amer­ica the past few years.”

Rob New­ton, a bro­ker with Su­pery­acht Sales & Char­ter who closed in 2016 on 205-foot (62.4-me­ter) Icon Party Girl, sees the Amer­i­cans-in-Europe trend hit­ting the 130- to 160-foot range in par­tic­u­lar. That mar­ket seg­ment is packed with pro­duc­tion and semi­cus­tom de­signs that have sim­i­lar fea­tures on both sides of the pond, mak­ing dol­lar-for-euro com­par­isons eas­ier.

“There are some sub­stan­tial price dif­fer­ences in, for in­stance, those larger Sun­seek­ers, the pro­duc­tion boats where you can track the value of the boat,” New­ton says. “It can be sev­eral mil­lion dol­lars’ dif­fer­ence be­tween a boat over here and a boat over there, so you hop on a plane and go look at it.”

Glynn Smith, a bro­ker with Deni­son Yacht Sales in Fort Laud­erdale, sees that trend hit­ting not only be­cause of deals to be made and the dol­lar’s strength, but also be­cause more Amer­i­can buy­ers are look­ing at pre­mium Euro­pean brands that used to give them sticker shock, in new builds and bro­ker­age alike.

“I think the Amer­i­can mar­ket has tried what I call the Fords and the Lexuses and the Fer­raris, those kinds of builds, and now they’re go­ing for Bent­leys and Rolls-Royces, the pedi­greed yachts over in Europe,” he says. “They re­al­ize the dif­fer­ence, be­cause they’ve ex­pe­ri­enced that now, and it’s at­tain­able be­cause [the euro-dol­lar con­ver­sion cre­ates] about a 30 per­cent re­duc­tion in price.”

The over­all in­ven­tory of yachts is also bet­ter than it was a few years ago, Al­bert says. That means Amer­i­cans look­ing for deals may find yachts in bet­ter con­di­tion than in 2008 or 2009.

“Dur­ing the crash, there were forced deals—they were half­price boats for a rea­son,” Al­bert says. “Maybe the guy hadn’t main­tained it, or the bank owned it and hadn’t main­tained it. Now, I’d say there are more real deals. You’ve got real boats with real own­ers that are well-main­tained.” One of the hottest seg­ments of the bro­ker­age mar­ket is 80- to 130foot (24- to 39-me­ter) mo­to­ry­achts, ac­cord­ing to New­ton, who is based in Fort Laud­erdale, along with An­drew LeBuhn, a bro­ker with Cam­per & Ni­chol­sons In­ter­na­tional in Palm Beach, Florida.

Part of the rea­son for the ac­tiv­ity, LeBuhn says, is the re­cent in­tro­duc­tion of the West­port 125 and Har­grave 116. Both new mod­els have caught the at­ten­tion of own­ers with West­port 112s and Har­grave 101s, who are now look­ing to move up—cre­at­ing an ex­pected in­crease in sup­ply of the 112s and 101s as bro­ker­age list­ings.

“For buy­ers, there would be ne­go­ti­at­ing room be­cause there’s in­ven­tory,” LeBuhn says. “Buy­ers have all that op­por­tu­nity out there.”

New­ton says buy­ers of 80- to 130-foot yachts started clos­ing deals a few months ago, first at the Fort Laud­erdale In­ter­na­tional Boat Show, and then when the Dow climbed af­ter the elec­tion of Pres­i­dent Trump.

“Re­cently, there have been quite a few 130 West­ports sell­ing, and they were on the mar­ket for a long time,” New­ton says. “Now, it’s boom, boom, boom—they’re clos­ing. The prices are at a point where they’re a good value now.”

Sales are slower in the 140- to 160-foot (42- to 48-me­ter) range, New­ton says. Al­bert sees a lot of in­ven­tory in that size range, too, with at least some sell­ers still look­ing to ad­just their sales pitches.

But up above about 160 feet, the mar­ket shifts again. With most ship­yards now re­port­ing fat or­der books for new builds, the hand­ful of late-model bro­ker­age su­pery­achts are in de­mand. This means su­pery­acht sell­ers can hold fast to their ask­ing prices.

“It is a buyer’s mar­ket in some ways, but there are ar­eas of the mar­ket now where we’re start­ing to see the sell­ers be­ing in charge,” says Al­bert, whose sales this year were among the in­dus­try’s big­gest: 236-foot (72me­ter) Golden Yachts o’Pari3 and 201-foot (61.5-me­ter) Amels sole­mar. “A cou­ple of new Fead­ships out there—the 96-me­ter [314-foot] Ver­tigo, the 90-me­ter [295-foot] aquarius— they’re hold­ing out for de­cent prices, and they’ve had good of­fers so far. Some of the very big­gest of the big, there are still boats out there that would not sell for less than a sig­nif­i­cant pre­mium, be­cause there’s not much avail­able and it’s still a long build process. The [bro­ker­age] mar­ket hasn’t fallen be­low the orig­i­nal build prices.” Also get­ting no­tice are three niche mar­kets where se­ri­ous deals are avail­able, or where in­ter­est is ris­ing.

The sail­ing mar­ket is the place to find lots of good deals right now, LeBuhn says. So many first-time buy­ers are go­ing for

mo­to­ry­achts—es­pe­cially those who made their money in tech­nol­ogy—that even top-qual­ity sail­ing yachts aren’t find­ing buy­ers.

“I’m a sailor, a New York Yacht Club mem­ber on the race com­mit­tee, but I would die and not be able to pay for my fam­ily if I were just sell­ing sail­boats,” LeBuhn says. “There’s plenty of good in­ven­tory, great sail­boats at good prices, but there’s just not enough buy­ers. It’s al­most like the fun­nel­ing of peo­ple to be pas­sion­ate about big sail­boats just isn’t what it has been in the past.”

At least a few of those buy­ers may be look­ing at ex­pe­di­tion yachts in­stead. Baynes says he sees a lot of buy­ers from the U.S. West Coast, and Sil­i­con Val­ley in par­tic­u­lar, look­ing at ex­plorer hulls that can go any­where and do any­thing.

“A good ex­am­ple would be Ulysses, a Kleven, which was one of the largest yachts at an­chor at the Monaco show,” Baynes says of the 352-footer (107.4-me­ter). “She’s a go-any­where, ice-class built to com­mer­cial stan­dards, but with a su­pery­acht in­te­rior. She’s get­ting a lot of at­ten­tion.”

Smith also sees an emerg­ing mar­ket for mo­to­ry­achts that are built to Pas­sen­ger Yacht Code stan­dards—mean­ing they can ac­com­mo­date as many as 36 guests, as op­posed to the more com­mon 12.

“You have about eight PYC yachts out there now,” he says. “In three years’ time, you’re go­ing to have 27 out there. This means 80 me­ters [262 feet] and above, a whole new bro­ker­age mar­ket is be­ing cre­ated for the fu­ture.”

The ex­u­ber­ance in yacht size seems to be a good match for the en­thu­si­asm of Amer­i­can buy­ers go­ing into 2017. Many busi­ness own­ers are hope­ful that be­cause of promised tax cuts, their dis­pos­able in­come may be­gin to match their yachting dreams that have been held in check since the eco­nomic crash.

“These peo­ple don’t want to be re­stricted. They don’t want to be told no,” Smith says. “They want to keep their op­tions open.”

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