Brokers: Local Yacht Market Holding Well, sales are steady but prices are lower
Recently, The New York Times ran a story titled “You Think Houses Are a Slow Sell? Try a Yacht.” The gist of the story, as you might imagine, was the woeful state of the yacht sales business. The yachts that the Times have generally featured a greater number of zeroes in their pricing than we are accustomed to in the BVI—$30 million being a good round number for the sake of their story.
Here in the BVI, yacht sales are a barometer of the economic future. Nobody buys a boat unless they think they'll be able to support it, they feel they'll be able to off-load it should things turn sour, and the bank is confident enough to lend money for the purchase.
The various levels of yacht sales here make it difficult to compare one company with another. Charter companies, like those in the TUI Marine stable, sell in two distinct markets. One is the sale of new boats into the charter fleet and the other, the sale of older boats out of the charter fleet. Sometimes one sector flourishes while the other languishes, and sometimes they both flourish together.
Companies such as BVI Yacht Sales, one of the top companies selling power and sail yachts in the Caribbean, concentrate solely on the used boat market and, while dependent on the economic ups and downs of its primary source of customers, the US, also has customers from all around the world. Some countries with flourishing economies like Australia, Canada and some European nations, provide a flow of customers when other streams dry up. Recently Australia's dollar has been strong and customers have shown up from Down Under with chequebooks in hand.
According to BVI Yacht Sales broker Brian Duff, “it's been very interesting because it's felt like a fairly tough year. We sold four boats more than last year, two boats more than the year before and we're only two boats behind 2007. While the volume is certainly still there, commission-wise we grossed less than last year. So the value of the boats is down significantly over 2009, and much, much less then '07 and '08,” he said.
Lack of demand has chilled pricing somewhat—the same boat might now be selling for a little over half of its price of two or three years prior. Another factor is the softening of the new-boat market, leading to aggressive pricing by manufacturers. “New boat builders are creeping up on us fast with their pricing—so you can buy a brand-new 40-foot catamaran for what we would need to get for a 4- or 5-year-old one on the used market,” Duff said. Citing the example of a 5-year-old catamaran of 42 feet LOA compared to a brand-new 40-footer, Duff said “In numbers, that's $380-$400,000 for either boat, and they have about the same interior volume because the designs are moving forward.”
John Welch, Sales Manager at Horizon Yacht Charters said he'd recently been at the Miami Boat Show—Strictly Sail, where he felt there was a greater turnout from last year, and “an up-tick in sales activity.” Welch said that interest was keen in Horizon's charter fleet and he anticipated a strong year going forward.
“We're gearing up for an increase in sales this year,” agreed Laura Greces, Sales Manager at BoatShed BVI, one of the BVI Yacht Charters group. “In October (2010) we had a new boat join the fleet and since then have sold a couple of Lagoons,” she said. Speaking of Australian buyers, Laura said that whilst interest was high, delivery costs from BVI to Australia diminished the advantage of the Aussie dollar.
All in all, brokers expressed cautious optimism and several mentioned that while they had been afraid of the market's future, reality had been much kinder than they had feared.
