Before opening this document in Word, I picked up a copy of the Berthon 2018 Forecast and had a read to see what we had said about last year. There on the page is the comment that we had a long way to go with Brexit fatigue – well we certainly weren’t wrong about that!
We foresaw a solid year in terms of our industry and that where Mr Trump and the USA went, the rest of us would follow. Also that the use of new technology and a different normal for blue water, coastal and clockwork sailing would march on – and that has been an important theme.
We have survived GDPR, a 2018 challenge, and on the whole we have become a better business for it. Our new IPV monster needs to be conquered this year. It is important that our industry is more professional about all its processes and being casual out on the water is just not cool. Of course most of the processes required are common sense, good seamanship and a sense of corporate responsibility. Our first prediction is that many will try to dodge this particular bullet or else they will try to avoid the problem by not wanting to organise sea trials for clients prior to a conditional contract being in place. This will be a shame as it is our view that the brokers’ duty is to manage the owners’ responsibilities and deliver a proper brokerage service including sea trial and to remember that our job is to make sure that the buyers and sellers of the Berthon fleet continue to have fun out on the water.
Returning to the B word… As I write 29th March has come and gone and it is a question of wait and see, expecting to see a White Rabbit dashing down the corridors of power in Westminster at any moment and hoping that soon it will be over or just maybe we’ll all be hopping mad at the outcome. Our client base has been remarkably resilient and this has applied to international clients also. Of course there has been a certain amount of wait and see, but not so much as to affect numbers to a significant degree. Brexit has been an excuse for buyers’ remorse rather than a spoiler of the fun so far.
On the basis that currency shifts are normally anticipatory movements have not been as significant as expected – indeed until very recently when sterling actually rose the day after the worst defeat that Mrs May suffered in Parliament – as the ups and downs are already priced in… We don’t expect to see sterling fall much further – it is still very weak, even after the recent 5% climb against both the euro and US dollar. Our prediction is that with a confused picture in Europe, elections in May which will usher in more popularism and impending recession, that euro priced yachts in this area are a good target for the 2019 year and that the US$ will continue to perform well enough for American buyers to continue to visit this side of the Atlantic for some yacht shopping overseas. Our 4 offices are well placed to help clients take advantage of this yacht arbitrage.
Of course the 25% duty imposed on American built yachts coming to Europe and vice versa is an issue but we predict that yachtsmen in our segment will elect to carry on as they have started and decide to use these yachts in the area of build and get on with life.
In 2018, American buyers became a much more important part of our yacht buying base and this was made possible by having a dynamic and nimble office on the East Coast of the USA, as we were able to offer our special relationship friends in the USA the convenience of banking within their continent via Berthon USA as well as speaking to the Berthon USA team within American time zones.
Being British, no forecast could possibly be complete without mention of the weather. Worldwide storms, hurricanes, forest fires and ice bergs countered periods of glorious, fantastic, amazing, extraordinary weather in Northern Europe, the Mediterranean and on the East Coast of the USA. The British find it hard to function without regular mentions of the weather and so I report we were amazed by the temperatures, lack of rain – which did little for the lawn (and of course we grumbled under our breath about it) but it was fantastic out on the waters around our coast. Whilst we wouldn’t dream of forecasting the weather for this year, a re-run will certainly be good for business and will see more yachtsmen boating in the Mediterranean wondering whether to consider a move northern waters which are fantastic – especially when experienced without rain!
New yachts were good to us in 2018 and we expect the same for 2019. For quality brands the only difficulty we foresee is delivery. For Windy we have again taken around 25% of their order book and this is a problem. For Pearl and Iguana sales are going well and as they are not high volume producers they rarely build to stock. Solaris is also super busy and delivery times are stretching as is the case with Advanced Yachts’ semi-custom approach.
It is refreshing not to have over supply, but frustrating for the team to have willing buyers who have to wait to long for their new magic carpet. However, we don’t see that this will change this year, as yacht building is a risky business and memories of the financial crisis still imprinted in most minds, well managed yacht builders will not be caught with stock and large overheads as was the case in 2008.
On the brokerage market we predict that good recently built pre-owned yachts will remain scarce and would suggest to those waiting for a super deal to consider the value of getting on the water and enjoying your new yacht. The market in this segment is buoyant, and he who hesitates…..as Del Boy would say…. Fewer new yachts are being built than in the mid-noughties and therefore the supply problem will not cure itself any time soon.
Larger yachts at 60 feet and up to 100 feet, pre-2005 and which need crew will continue to remain problematic to place. The cost of maintaining and running these lovely yachts weighs on those who have the ability to purchase in the main continue to prefer the newer, smaller, more nimble alternative. Our advice to those owning these yachts is to be super realistic about what you own and the responsibility that you are imposing on her new owner. Be magnanimous on pricing and the deal will be consummated more quickly, letting your buyer enjoy the yacht knowing that they bought well – otherwise they may not buy at all. Apart from the carrying costs they are losing out to the march of new technology with the market preferring high tech build, more simple and up to date systems, modern interior styling and layout and the easy, 21st century sailing experience that this brings.
Larger yachts – say over 100 feet are ageing more graciously simply because of their scale and value making it worthwhile to invest heavily in a serious rebuild and remodel rather than just a makeover. That said there are those which are looking sad and very difficult to sell today and it is possible to buy a tired 140 footer (c35m) for plus or minus £1m if you really must and have the courage for the on costs.
It has been coming for some time but it is clear that the day of the multi hull is dawning and design is developing rapidly in this sector. The charter market is still important but now these great platforms are being built for family blue water cruising and the quality is improving. With these great sailing solutions for living accounting for around 50% of the ARC fleet, they are becoming the weapon of choice for many sailing families. This trend will continue this year.
Another prediction for 2019 is that Palma will continue to grow in prominence this year. THE centre for yacht sales in the Mediterranean. It is beloved by owners and crews alike. Berthon Spain is super busy with refit, guardiennage and keeping the Berthon Palma fleet gleaming. The Palma Super Yacht Show also gains in prominence annually ensuring that the main fleet of brokerage yachts spend time in this great location. We are showing Dixon 73’ LA LUNA at this year’s show and we look forward to seeing you there.
Of course no forecast could be complete without a mention of Steve and Linda Dashew and FPB which continues to be the gold standard in explorer motor yachting. This January FPB 78’s GREY WOLF II and IRON LADY undertook what their owners called a family cruise in the Antarctic, dealing with conditions that most yachts could not dream of surviving. In the meantime the rest of the fleet continues to crisscross oceans, and the pre-owned FPB fleet has for the most part sold. Where there is a fleet total of only 18, if 6 yachts are on the market, things get a little crowded. Now that this period has passed, we predict that values will harden for these special yachts and that they will continue to be the benchmark by which others are judged.
Berthon has been involved with the sales of pre-owned Discoverys for a number of years and the first part of 2019 has seen a flurry of closing for all sizes of this remarkable English brand. They continue to offer a fantastic platform for family blue water sailing and working with John Eustace at JE Marine, we are seeing these yachts journeying oceans and providing life changing experiences for their owners in all corners of the globe. John is able to offer his enormous experience of the brand to support these yachts with spares and positioning advice and assisting with refits over the inclement months (mostly accomplished at Berthon). We are also delighted to announce that as ever we are working closely with our friends at Discovery and we look forward to representing them as brand ambassador in the Balearics. Their build sheds are only a few miles from Berthon and are heaving with craftsmen and new yachts in build – long may this continue.
Brexit and VAT. This is definitely not on our prediction radar. Many have opined about yacht location at the point of exit, so that if your yacht is VAT paid and in Europe she remains VAT paid but possibly VAT liable when she comes back to the UK once we have left, if we leave. Others pronounce the best case scenario that may herald a no VAT regime if we are outside the Customs Union – as so it goes on. For now, with so much noise and hot air, we prefer to remain silent on this particular dragon.
So a flurry of predictions – IPV is in and will be seen to be a good thing, the US$ will remain king, trade tariffs will remain an inconvenience, and new yacht deliveries will continue to be tough. The weather and Brexit are just too tough to call and good, recent brokerage yachts will continue to be at a premium so they are worth snapping up. The march of technology will continue and the look and feel of new yachts will continue to move fast – and expect to see more yachts with spare hulls! Yachts will be faster, slicker and a lot greener in the future. FPBs will continue to venture where few other yachts dare, and Planet Earth will continue to turn in 2019.
So as 2019 marches on, so does the Berthon team, now in 4 countries, with all the same faces and some new ones added, we look forward to working with you this year. One prediction that we can confidently make is that this year, as with all others, you will find that there are very few things quite so worth doing as making time to get out and enjoy being on the water.
Fair winds and good sailing from the Berthon team.