When I sat down to write the 2017 Berthon Forecast, I did so against a backdrop of enormous change politically, economically and socially. 2016 was a very big year. Now that we have said good bye to 2017, 2018 is looking rather tame!
Mr Trump has just made his first State of the Nation speech, the USA economy is roaring away, and the world economy as a whole is now growing and exhibiting all the growing pains that we should of course expect, but which continue to surprise the pundits. For the first time since before the crash of 2008, the money men are starting to witter about interest rates and of course, we all now have Brexit fatigue – but there is a long way to go and at least it gives the journalists a constant source of material – so someone is happy!
We live in a rapidly changing world and the changes are so wholesale that it is easy to miss the incremental ones which would have made headlines in the broadsheets a few years ago. We have intelligent technology, global warming, the rocket man (and space car or is that a car in space?!), instability in the Middle East and much, much more to contend with all on a planet which is a tiny spec in the vastness of the solar system.
All these changes have been mirrored in the yachting market. By far the most significant has been the overriding trend of growth, albeit at a slow pace which has provided the funding for yachtsman to get out there and have fun on the water. This is followed very closely by the enormous swings in currency. This is something that we monitor carefully, but without doing so we can easily spot them as the enquiries shifted during the year, from the USA to the Southern Hemisphere and then back to Europe as a rampant € carries all before it.
The USA has been a particularly interesting market this year. Concerns about the new administration led to a slow start to the year but this improved in quarter 3 and the latest tax cuts have led to a lot of activity there. A growing USA economy is now changing the landscape noticeably but this is set against a very weak US $ which is seeing yacht arbitrage occurring with holders of Euros in particular, heading to the East Coast of the USA to shop for yachts.
And then there was the weather….. as a Brit is it of course natural that this is uppermost in my mind – but it has played a significant role in the market this year. In the UK the weather was relentlessly awful in 2017 and this meant that yachtsmen who increasingly have more hobbies and less time to spend on their yachting, have migrated to areas where the weather patterns are more certain and sunglasses and ambre solaire are relevant to the yachting experience.
Weather throughout the globe is changing and the hurricanes in the Caribbean are a stark warning of what we can expect in the future. In the Caribbean this winter, there has been plentiful rain and windy conditions and it has been the same in the Mediterranean. For the rufty tufty high and low latitude sailors there are also massive changes occurring with passages opening and closing, and with dramatic movements in pack ice and new and different seasonal cycles.
Happily this hasn’t put yachtsmen off the sport, but it has encouraged them to look at where they keep and use their yachts.
Intelligent technology is much talked about and we are told that none of us will be allowed to be behind the wheel of a motor car in a few short years. Evidently we are terrible drivers…..Ronald the robot will see to all that. We are also starting to see the start of this trend with yachting with docking programmes allowing your yacht to park herself, dynamic positioning and much more elaborate programmes allowing Ronald to calculate exactly the moves needed to make your grand prix raceboat sail to her potential.
However, the most significant change is the way that yachts are made, and the materials used. As computer modelling and high tech materials become more common, the sort of yachts that they deliver – fast, efficient and with clean lines and sparse interiors, becomes the accepted norm. The loft living interiors of the production yachts has now spread across the piece and high quality yachts of all hues are offering clean lines and superb interior design.
Simplicity is good, particularly as yacht builders are now really attending to the necessity to have access to equipment for maintenance and service. Yacht design has changed hugely over the past few years but what has become extremely evident in 2017 is this is now becoming the norm.
This means that the older brokerage yachts with their traditional looks and more complicated systems are becoming harder to sell unless their owners accept the market’s view of value and importantly, that they spend the money to keep everything properly up to date and in good working order. Gaffa tape and hope no longer cuts it. If your yacht needs a new teak deck or full paint job, to sell the yacht in this market you will need to take a deep breath, pay the bill and put the yacht on the market in the knowledge that you will not get your money back, but your yacht will sell instead of her sisters.
We predict that with an optimistic America powering forward that Mr Trump is right that if America does well, so does the rest of the planet. The market in that continent is relatively small and will continue to be dominated by a demand for production sailing yachts that are owner driven, preferably with shallow or variable draft and by the picnic boat/ Back Cove solution. More wealth will not see this change, as these types of yachts are absolutely the best solution for these waters. However, we will see more Americans choosing to go blue water sailing and motoring, and for these they will visit Europe and other areas that build and supply the tools that they need for this job. American buyers are sophisticated and do the research, and aren’t afraid to travel to get what they want.
In the UK, the Brexit effect has been less pronounced in 2017 than we expected. The general view is that life is for now and that if there is money to spend on yachting then let’s spend it. We feel that concern about the instability of our leaders in Westminster and the possibility of a surprise result of the next election is of more concern than the Brexit cloud. As we get closer to 2019 we think that this concern will be more widely felt.
We thought that Europe would experience a slow-down in 2017. This did not come to pass but in the end it was currency shift that drove the market and we sold a lot of yachts to Europeans last year and indeed for them. Because of the increasing desire to yacht in the sunshine, Palma de Mallorca has grown in prominence again and this is set to continue with the marine businesses surrounding it doing well. Many shipyards in Northern Europe now have satellite operations in the area so that they can manage normal service for their clients, taking yachts back to their shipyards between seasons to carry out more major work and having them positioned back in the sun the following season.
Where there is a conglomeration of yachts – the business of buying and selling yachts will always be brisk. For this reason, the Mediterranean will grow in prominence in 2018 with the buyers and sellers being ever more international.
The FPB Programme is shut – and we certainly didn’t predict that! Steve and Linda Dashew went cruising and decided that life aboard FPB 78#1 COCHISE was more fun than building yachts! And we don’t blame them. With 18 hulls either in build or cruising, this incredible series will continue to be a stand out product and unique in its capability. Those fortunate enough to be FPB owners will cruise far and residual values over the coming years will remain high. It is a small market but for those that plan serious blue water, there is simply nothing else on the planet that delivers to this level. Like the Dashew sailing yachts they are one offs – and we at Berthon specialise in selling, mooring and refitting unique yachts.
On sailing yachts we have understood the move towards light, fast and stylish, yet still with quality. The way forward has been forged by the production builders like Beneteau and Hanse, but there are many yachtsman who prefer to pay more for a quality yacht moulded to their wish. This is why the Advanced 80 that will launch this year for an English client is eagerly awaited. We are also now handling Solaris in the UK with our good friend Richard Baldwin. Whilst we expect that many new Solaris owners will prefer to yacht in warmer waters we expect a number of them to be British.
For Windy, the innovation continues and the issue is not sales but delivery. All territories are doing well and in the UK and France 2017 was a fabulous year. We predict that the market for these benchmark, drivers’ boats will continue to be strong – especially demand for the new Blackhawk SR43 due to debut at Cannes in September 2018.
However, the most important thing in 2018 will be to remain nimble as the market moves and changes. Trends that once lasted for years with owners able to be nonchalant on resale can now shift in months. The biggest challenge for us this year will be to articulate what is happening in the market so that an exit is achieved at market price and the opportunity is not lost. We have already seen this year situations where waiting too long to confirm an offer has seen it lost to another yacht owner, who understands that a cash buyer is a more difficult segment, is a prize. Once lost, the selling price further down the line has without exception been 10% to 20% less than the first offer – he who hesitates – and all that…
As we trundle along in the new normal,a lot of firms have changed hands, regrouped and are off to the races again, building, servicing and supplying the market. This is all good news but we do caution our clients that borrowing money to buy yachts let alone to fund yachting businesses continues to be very tough. If you are spending with a firm who is building or may be carrying out a major refit on your dream yacht, do take the same precautions that you would in the course of your normal business and run the checks, look at the balance sheet and be happy that they have the ability to follow through and deliver. The sad demise of Oyster Marine is a reminder of the importance of this, but hopefully some sort of phoenix or renaissance will rise from its ashes.
Likewise, if you are using a broker, make sure that bank details are verified (we bore our clients by checking every time but it’s worth the faff) and do be sure that the correct separated client account is in place and that your funds are secure.
2018 also sees the introduction of GDPR. This new legislation means that you need to opt into mailing lists of those yachting firms with whom you wish to stay in touch. We firmly predict that some of our clients will wonder why we aren’t in touch post May 25th. It isn’t because we’ve forgotten you but simply that we actually can’t contact you by law, so please do get in touch as we are keen to help with your yachting plans.
With Berthon celebrating 100 years in Lymington and with 150 years of experience between the Berthon sales’ team alone, the faces are all the same. Welcome to this new year of change, political high drama, further development in yacht design in all segments and the opportunity to get out there and have fun on the water. Fair winds and good sailing from us all.
Fair winds and good sailing from the Berthon team.