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Market Report 2017 – the Yacht Market and bringing the mountain to Mohammed…

May 26, 2017

Berthon publishes an annual Market Report which reviews the yachting market over the previous year, and examines what we think will be the important trends and changes in the year ahead. A digital copy is available at http://www.berthon.co.uk/yacht-sales-brokerage/yacht-market-report/ and you can also request a hard copy at brokers@berthon.co.uk.

Over the course of the next few month’s we’ll be broadcasting other articles from the Market Report via the Berthon blog and social media. If the articles and ideas are interesting and you would like to know more, or have questions, please do get in touch……

berthon-market-report-yachts-sales-mountain-moham

Unlike houses, at the risk of stating the obvious – yachts move. It is their charm and why we love them – they are our escape capsule to the world of cruising and relaxing and their only real limitation is our imagination.

Because of this, we are asked to handle yachts that are located in very many parts of the planet. Owners have a variety of reasons for the chosen location – it’s a favourite cruising ground, or perhaps it’s where the adventure ended, close to friends, a holiday house or even in an area that is great value with service support that is trusted and used for years. All this is very understandable; but a snug berth in Outer Mongolia, or the far reaches of the Mediterranean, Caribs or elsewhere on the planet does not help us to sell your yacht.

It has been very well rehearsed in previous editions of the Lifestyle magazine that there are 3 aspects that have to be right if a yacht is to find a new home within a reasonable timespan – price, condition and location. All are very important but location is often the most difficult of them all to get right. Yacht owners will airily state – if anyone’s interested – they can easily see the yacht…of course this is entirely correct, but only if they are so focused that they are prepared to take a flight from Stanstead in the deep mid-winter, arriving at a regional airport at midnight where they wait to take an internal flight at 1100 the next morning to a very small airport which is only a 2 hour (rather terrifying) cab ride from the port. Of course, because its winter there is only one hotel and the restaurant is shut. The trip back is equally intrepid. You will not be surprised to read that in these circumstances, viewings will be in very short supply.

The plain fact is that in the last 5 years yacht purchasers have become time poor. In many cases they have a lot of calls on their time apart from the office (where they work very hard). It is our experience that normally yachting is just one of their interests – they may fly, play golf, shoot, play squash and very often they will have children who also have outside interests which need to be watched at weekends. Therefore, trudging across Europe (or further) is simply not a feasible option, and a yacht in a faraway location, however attractive the price and specification, will simply be put in the ` too difficult to deal with’ pile. The second is that in most aspects of life, it has become much simpler to buy something – particularly a valuable, capital item – and yacht buyers expect that the world of yacht sales will be the same, and that includes its accessibility.

Buyers today research carefully online and, recognising this, we put a lot of resource into making sure that the details and information that appears digitally is as full as possible. In this web-based age, you don’t get any second chances, and the broker will never speak or be in contact with a prospective buyer who discounts the yacht on the basis of published information. We need to impress and inform at the outset.

Having made their short list, they will prefer to view in a location that has good direct flights, is not far from the airport (which hopefully has some merit in terms of activities for the whole family), and importantly, where they can see a selection of brokerage yachts in order to make comparisons. In this way they feel that they are doing their research. People do not look at hundreds of yachts anymore. They identify the yachts of interest online, develop a short list, inspect and then offer.

A word about aeroplanes…the fact is that many of the chartered flights no longer run midwinter, and yachts are rarely located in areas where there are scheduled flights. The days of easy travel to the Mediterranean and elsewhere and taking straight forward day trips to places like Palma in the winter – are over…many viewings involve an overnight stay, not great airport choice at either end, and lots of waiting around. Of course some of our clients fly themselves, but for everyone else, this is off-putting and it is not unusual for a match made in heaven in terms of yacht to client, to flounder because of the difficulty on getting to the quaint, out of the way location that the owner has selected for his yacht.

Then there is the conundrum of where to leave the yacht when it is decided to move her to a location to sell. In reality, there are relatively few places that really cut it. They need to have excellent transport links, be in a nice area, and massively importantly, they need to be in a location where there are other similar yachts for sale.

Like any product, bringing the yacht to the High Street of yacht sales improves her chances of selling. Yacht owners worry about having their yacht in the same place as the competition. The fact is that yacht purchasers will buy the yacht that they prefer and if they do not like your yacht as much as the competition yacht – they will buy the competition yacht. This is the case wherever she is lying, even if she is in the middle of nowhere. If this is the case you will never know as they will never make the trip to view. Or if they do, they still won’t buy her and you will have the disappointment of your first viewing in 4 months – and the viewer does not progress.

However, by having her in an area with other similar yachts, she will definitely be seen by buyers looking for that type of yacht, and this comes with the advantage that your broker may be able to upsell your yacht to a buyer or show her to a buyer who hadn’t considered this type of yacht but falls in love the moment they step aboard.

It might seem that there are many places that could be suitable, but in fact the list is surprisingly small as far as the international market is concerned. I am afraid that the Eastern Mediterranean has no suitable areas, and this is likely to remain the case for now. This leaves the Western Mediterranean. One centre for sailing yacht sales is definitely in Palma de Mallorca, and the same applies to a degree to motor yachts. This means the Bay of Palma, it does not include Minorca, Ibiza or areas in the North of Mallorca – it sounds strange – but you do not get viewings in these areas as a 50 minute drive to the top of the island or a short aeroplane trip may be planned, but where time is limited and there is lots to see in a central location, more often than not, the viewing will be cancelled. Very often a yacht which wasn’t on the potential buyer’s radar but which is easy to see, wins the day.

For motor yachts the Cote d’Azur is as good an area as any, and St Tropez, Cogolin and Antibes are useful with enough sailing yachts thrown in for this to be a suitable area for both. Sometimes yachts congregate in Imperia just over the Italian border; again, this is limiting options as getting there requires a train or bus, and if the choice is hire car it is in quite the opposite direction to all the other South of France based offerings. However, in the summer this a frustrating affair anyway with many traffic jams and travel by helicopter becomes an imperative, not a first world indulgence.

Anywhere in the Caribbean is a no go. In the USA there is the Newport area, and then Florida is another good spot. However, here most berths are attached to a house, so make sure that yours has proper access and that the yacht is visible. On the West Coast, San Diego, Marine del Rey and San Francisco are the centres and viewings are possible as with Seattle – also a good staging post.

In selecting a location, you need to be aware of the local taxes that are due. In the USA, if your yacht is not duty paid, you should not offer her for sale. This is non-negotiable fact and do not believe any broker that tells you that this is not the case.

In Europe, there is the spectre of the VAT status of your yacht. In most member states arrangements can be made to account for the VAT properly on sale. However, in the UK all yachts being offered for sale must have accounted for VAT. To allow this to happen, there is a Customs Warehousing scheme that yachts can participate in whilst they are for sale. Whilst in the Warehouse, they must not be used. If you are still planning to use your ex-VAT yacht whilst she is for sale, you should therefore avoid the UK and take advice about her use elsewhere in Europe, as EU Nationals should not be sailing around in non-VAT paid yachts in the EU – period.

That said, the UK is a good location for yacht sales. The South Coast is close to the London airports so day trips are entirely possible. Another good area is Holland – Schipol airport is close to everywhere in Holland and there are a selection of sales marinas where yachts are stored until sold.

Outside this there is very little in terms of yachting centres for yacht sales and it is not unusual for yacht owners to move yachts from Scandinavia or the Southern
Hemisphere to find a new home. It seems counter intuitive but most of the yachts that we sell from one of these centres make their way again, to far flung destinations which are totally hopeless for yacht sales, but which are charming and the natural environment for relaxed yachting.

Much is spoken about the fact that there is a dearth of pre-owned yachts in some segments and it is the case that there are few yachts which are hot at any particular moment. Owners of these can afford to be a little more sanguine about location, but if they wish to achieve market value within a reasonable time span, we would always recommend a location that assists with this. However, there are many yachts which are more challenging in terms of finding a new owner and it is key that they are positioned where they can easily be seen. This applies most particularly to custom and semi-custom yachts with little in the way of pedigree or those in a segment which is not appealing to the market of the day.

Of course those owners with crewed yachts have many more options in terms of the positioning of the yacht, but in this case, there is no point telling the broker that the yacht has a programme and that whilst she will be in “Outer Mongolia” for the next 6 months, there is a window of 4 days when she will be available to view in Palma en-route. Better to complete the Mongolian programme, and then bring the yacht to where she can be seen for a reasonable period.

This is not to say that the yacht cannot be used, but she must be readily available. Yacht purchasers have a lot of choice, and they buy a yacht for fun. The easier and more fun the process and access, the better the chances of success.

Therefore, bringing the mountain to Mohammed is our best advice, as this will greatly assist in assuring a sale to Mr Mohammed at market value.

Contact sue.grant@berthon.co.uk.

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