Boat prices after Covid 19

[redneckrob]

Originally Posted by arsenelupiga

last i have done calculations boat chartering brings way more investment return than air bnb. Also boat can be very cost effective home. Especially monos. Also there is next generation of retires ripened that will look for life different to old people care - they will want to skip that bit. I can see property getting deflated, but boats not so much. EURUSD down that much, not likely, but keep crossed fingers.

Would love to see those calculations! You figured in the cost of insurance (not what you're paying now, the much higher rates you pay when chartering), realistic maintenance (that includes flying people out to where your client is broken down), depreciation (of a well used boat operated by non owners), and the value of your time? Against a fraction of all that with an AirBnB?

Sure, I guess if you try to operate an AirBnB in a crappy apartment complex in a bad part of Detroit...but otherwise that's delusional. What kind of boat do you own again?

[Mexdon]

Originally Posted by barnakiel

Why?


Do you say "NZ and AUS do not let us out"?


You know, Greece, Italy also Croatia have already announced they are opening up for tourism this summer.


Why would a Kiwi or an Aussie not be allowed to come and buy a boat there?


You will notice there used to be alot of blah blah blah by the politicians now however everybody says "we are opening up, PLS PLS PLS come and spend your money HERE"



So on the EU front you are fine. It can only be NZ or AUS govt ill will, if they say you can't.



barnakiel

Sorry for taking so long to answer.

At the moment the NZ and Australian borders are totally closed to any foreigner Only returning nationsal or permanent residents can enter the countries. Then they must go into a controlled 14 day quarantine in a hotel nominated and paid for by the government.

New Zealanders are not permitted to travel out of the country unless it is for essential purposes, For the general public the two governements (NZ & OZ) are discussing creating a bubble between he two countries that will allow the citizens of one visit the other. Beyond OZ for NZers is a no go. I have been told by my contacts in NZ that they are talking about keeping the travel ban in place until 2023.

It has absolutelu devestated the tourism industry in NZ with the govt. muting a 4 day working week to boost domestic travel.

It is already affecting the AC teams who have not yet arrived... they are thinking how to handle this but no decision has been made yet. Any crew members who hld NZ passports can enter and go into the quarantine program. I very much doubt if any foreign nationals will be allowed to enter as spectators. No mention has been made on this by the government.

All of this is to eliminate Covid-19 in the country. The last figures I saw there were just 28 active cases with one person in hospital (not in intensive care) with 97% of all reported cases (1,504) recuperated, there have been so far 21 deaths. For 3 consecutive days they have no new reported cases and are testing around 6,000 people a day.

[Tillsbury]

International tourism is devastated, but there are starting to be anecdotal reports that many other businesses are booming beyond all recognition. For a start the food and beverage industry as a whole has been working throughout at much higher volumes than before. Companies I know of involved in all sorts of parts of the retail industry are reporting that May's orders have already made up for more than the hole that was April. The biggest problems at the moment are getting deliveries made, with couriers completely swamped by the demand.

[arsenelupiga]

Originally Posted by redneckrob

Would love to see those calculations! You figured in the cost of insurance (not what you're paying now, the much higher rates you pay when chartering), realistic maintenance (that includes flying people out to where your client is broken down), depreciation (of a well used boat operated by non owners), and the value of your time? Against a fraction of all that with an AirBnB?

Sure, I guess if you try to operate an AirBnB in a crappy apartment complex in a bad part of Detroit...but otherwise that's delusional. What kind of boat do you own again?

eh well you obviously airbnb. Lets go for the biggest ticket item.

40 ft cruising cat costs (speak usd) 400k, 2 bedder in average major bubble city 1m.

Short term letting costs 3% pa + other costs 1% that ad up to 40 k. Charter boat say same 40 k pa.

weekly boat charter (from times i was testing boats) costs 800 p/day. Airbnb you lucky if you get 200 per day.

Now there is interest cost, you right interest rates low, say 3%. Unit costs 30 k p/a boat say 15k as interest rate subsidised for property.

Boat occupancy 30%, Airbnb 60 % (optimistic) , airbnb is way behind.

You are right though after 5 years boats get to lower pricing range. However, units need renovation that say cost 3% pa. In good times people can get away with not doing it, in bad times, you gotta lift the game or have it empty.

I had 1 coronna too many today to calculate exact outcome but pretty clear boat comes way ahead.

good luck with you airbnb.

[mvweebles]

Originally Posted by Tillsbury

International tourism is devastated, but there are starting to be anecdotal reports that many other businesses are booming beyond all recognition. For a start the food and beverage industry as a whole has been working throughout at much higher volumes than before. Companies I know of involved in all sorts of parts of the retail industry are reporting that May's orders have already made up for more than the hole that was April. The biggest problems at the moment are getting deliveries made, with couriers completely swamped by the demand.

There are very small pockets where this might be true, but as a whole, not accurate. Where it's true are large retailers such as Costco, Walmart, target, etc. It helps when the govt shuts down your competition. Also helps when there is panic buying and hoarding.

These aren't my statements but the statements of the companies themselves.

Track oil pricing and you'll have a good idea of how much stuff is bring moved. Regardless, either way, lousy barometer on boat market pricing.

[Mexdon]

Originally Posted by mvweebles

There are very small pockets where this might be true, but as a whole, not accurate. Where it's true are large retailers such as Costco, Walmart, target, etc. It helps when the govt shuts down your competition. Also helps when there is panic buying and hoarding.

These aren't my statements but the statements of the companies themselves.

Track oil pricing and you'll have a good idea of how much stuff is bring moved. Regardless, either way, lousy barometer on boat market pricing.

I believe Tillsbury was only refering to New Zealand and not the world in general, or USA, which was in reply to my previos post specifically on New Zealand.

[contrail]

Conversations I have had with broker friends buttress the fact that boat sales, for "nice boats" have not slowed down. Pretty much the same for prices. I live in the BVI and I know the biggest surveyor here, and his staff, pretty well. So, yesterday, I put the question to him and he said that, notwithstanding all of our borders being closed so that prospective purchasers can't even get in to look at possible purchases, he has four surveys lined up for boats that have contracts on them, sight unseen. All nice boats, and it is worth mentioning that we have lots of private boats down here, not just charter boats, which can also be nice and high value. I was amazed, and he was, a bit, too. He has been here for 2008, 9/11, and hurricanes prior to that. The purchasers often mention that they want something where they can "get away". He does think there will be an eventual drop in buyers and prices, but in about a year. Right now, things are moving.

[redneckrob]

Originally Posted by arsenelupiga

eh well you obviously airbnb. Lets go for the biggest ticket item.

40 ft cruising cat costs (speak usd) 400k, 2 bedder in average major bubble city 1m.

Short term letting costs 3% pa + other costs 1% that ad up to 40 k. Charter boat say same 40 k pa.

weekly boat charter (from times i was testing boats) costs 800 p/day. Airbnb you lucky if you get 200 per day.

Now there is interest cost, you right interest rates low, say 3%. Unit costs 30 k p/a boat say 15k as interest rate subsidised for property.

Boat occupancy 30%, Airbnb 60 % (optimistic) , airbnb is way behind.

You are right though after 5 years boats get to lower pricing range. However, units need renovation that say cost 3% pa. In good times people can get away with not doing it, in bad times, you gotta lift the game or have it empty.

I had 1 coronna too many today to calculate exact outcome but pretty clear boat comes way ahead.

good luck with you airbnb.

Sorry but we're not even in the same universe if you calculate your maintenance, insurance, and management costs the same for an apartment as a boat being chartered. Again, no disrespect but it seems apparent you've never actually owned and operated a $400K boat or gotten actual insurance quotes for a boat in charter?

[barnakiel]

Originally Posted by Mexdon

Sorry for taking so long to answer.

At the moment the NZ and Australian borders are totally closed (...)

Very interesting all you are saying. Thank you for sharing the picture.



I did not know it is so strict out there. We lived in NZ and so I follow your news. Found the 4 days' week info yesterday at the Guardian. Read with much interest.



I do not know about AUS, but NZ has always been naturally isolated. Far away and hard to get to. This helps with the covid situation but sure makes other things even harder now.


Places that are naturally isolated seem to 'fare better'. If anybody does. We are now in Canary Islands, our numbers are still falling down while in continental Spain there has been a clearly visible increase of cases over last week. There is no way to stop this given their lifestyle. Second wave, here we come.



I was also shocked to see the vast difference between Greece and their neighbouring Italy. So, clearly, being beyond some water and in many smaller communities rather than a huge city helps.


Too bad AC will be affected. The good news is that online sports are getting quite good now - I followed online ever since the foiling tractor. (Was it 3 editions back then?). Will be an amazing feat of sailors effort and digital media genius this time on Hauraki. I am looking forward very much.


Take care. Stay safe. It is better to kill tourism but save lives. Saved lives can rebuild anything.



Cheers,
b.

[Tillsbury]

Originally Posted by Mexdon

I believe Tillsbury was only refering to New Zealand and not the world in general, or USA, which was in reply to my previos post specifically on New Zealand.

Yes, sorry if I didn't make that clear. I was only talking about new Zealand, where we've been out of lockdown for over a week now and many things pretty much normal outside the international tourism and mass crowd market. Long weekend coming up and places booked out heavily with locals now able to visit tourist destinations that used to be full only of international tourists.

If we can't spend money booking overseas trips and going to sporting events then it seems we'll spend it on something else instead.

I'd be very surprised if the America's Cup were seriously affected. The local team were out on the water three weeks ago when we started releasing restrictions, and given that anyone arriving will be in 14 day quarantine first I can't see the problem. Their only worry is keeping the mast pointing upwards.

[Lake-Effect]

Here is the second story I've seen this week that RVing is experiencing a small resurgence. Since cruising is mainly RVing on water this suggests that cruising boats could also find a new market.

[Kimo_Kai]

Originally Posted by Lake-Effect

Here is the second story I've seen this week that RVing is experiencing a small resurgence. Since cruising is mainly RVing on water this suggests that cruising boats could also find a new market.

I saw that too. Baby Boomers all in for covid campers. It's so interesting how it's all playing out. I wonder if they are mainly paying cash or financing their Birkshire boxes on wheels. The virus, plus the massive stimulus, are causing behaviors that one would normally not expect.

Case in point is the stock market. Ever searching for the greater fool it has most recently found sports gamblers to help prop up it's last gasp. Since there are no sporting events to bet on, folks who just have to gamble are jumping over to Wall Street. This can't end well but who knows...nothing else seems to be following any playbook.

[Lake-Effect]

Originally Posted by Kimo_Kai

I saw that too. Baby Boomers all in for covid campers. It's so interesting how it's all playing out. I wonder if they are mainly paying cash or financing their Birkshire boxes on wheels. The virus, plus the massive stimulus, are causing behaviors that one would normally not expect.

Even before the pandemic, a few of our friends were getting travel trailers or bigger boats, as they plan for retirement. I suspect that COVID-19 is simply encouraging more of them to get off the dime and commit to an RV. These folks have savings; it's not going into debt, as far as i can tell.

We also have a few friends who have just decided to retire early because of the coronavirus.

So - boomers retiring early... that's a good thing; more jobs opening up for the rest.

Case in point is the stock market. Ever searching for the greater fool it has most recently found sports gamblers to help prop up it's last gasp. Since there are no sporting events to bet on, folks who just have to gamble are jumping over to Wall Street. This can't end well but who knows...nothing else seems to be following any playbook.

The stock market is a consensual hallucination. If you, me and other investors can remain optimistic... it won't crash. Of course, rioting and picking fights with China isn't going to help the mood.

We've been told that there are several good reasons for why this is not going to be the 1930s all over again. I expect another bottom, after the second quarter results are known, but by that time there should also be some hopefully positive results from opening up again. All the people here who are itching to buy a low-priced boat, companies with cash waiting to pick over the corporate corpses of failed companies... there is still lots of wealth sloshing around, just looking for opportunity.

[Kimo_Kai]

Originally Posted by Lake-Effect

Even before the pandemic, a few of our friends were getting travel trailers or bigger boats, as they plan for retirement. I suspect that COVID-19 is simply encouraging more of them to get off the dime and commit to an RV. These folks have savings; it's not going into debt, as far as i can tell.

We also have a few friends who have just decided to retire early because of the coronavirus.

So - boomers retiring early... that's a good thing; more jobs opening up for the rest.

The stock market is a consensual hallucination. If you, me and other investors can remain optimistic... it won't crash. Of course, rioting and picking fights with China isn't going to help the mood.

We've been told that there are several good reasons for why this is not going to be the 1930s all over again. I expect another bottom, after the second quarter results are known, but by that time there should also be some hopefully positive results from opening up again. All the people here who are itching to buy a low-priced boat, companies with cash waiting to pick over the corporate corpses of failed companies... there is still lots of wealth sloshing around, just looking for opportunity.

“The big money is not in the buying and selling, but in the waiting.” – Charlie Munger


Kimo
Marooned on Maui

[andypag]

Wow, this lot are a tough crowd!

Originally Posted by chakil

Hi fellow sailors,

The boat prices will crash at least %40 on monohulls and %30 on multihulls, anyway there was a bubble on multihulls after the hurricanes , you may say it will be back to real value

Most of the charter companies will downsize or bankrupt ..

Sailing will not be so attractive for a period of time as the quarantine rules will be on practice until there is a vaccine

Charter companies or individuals who made some downpayment for new boats will burn the deposit and never deliver their boats, these boats will be overstock in the companies and will be on sale with big discount to create cashflow

Second hand market will try to keep the value until the flow from the big charter companies

At least 2 of the big 5 will close or change hands..

EurUsd will crash to 1 or 0,75 by the end of the year , where the real discount will occur

My pennies worth on Cats which is my personal interest...



I think the Charter businesses are going to struggle. But I'm not sure how cash poor they are when you consider some don't have much capital overhead cos their boats are owned by owners not the company. Staff are low paid freelancers that can be furloughed easily to match demand. Marinas will abosorb the pain with their charter company clients, because they have no option and they'll take the long term view. There's no get-out for those owners who can't sell, and aside for some increased expenses maybe there's not much incentive to get-out if they're planning to pick up their boats at the end of a five year contract.



But other charter companies who own their own stock, will find it much harder to sit out effectively a years worth of income. The larger ones might be supported by increased debt from banks, and that will either make the businesses less profitable further lowering demand, or at worse just delay any bankruptcies for 1-2 seasons. The companies that will survive will consolidate or become leaner but ultimately charter hoiday demand will drive the size of the stock they keep and the boats they sell.



Compared with beach holidays a charter holiday seems like quite an attractive option if you want to be away from "dirty infected other people", but weigh that against the increased hassles of restrictions to freedom of movement and difficulty getting to charter location start points. The price will be pressure upwards through reducing economies of scale. Hard to second guess how badly demand for charters will be while we wait for a vaccine. Dented certainly but maybe not crippled.



There's also a numberof "gonna buy a boat one day" buyers (full disclosure - that's me) and "I want to get away from this crazy world" buyers (also me) who are now galvanised into looking for a bargain. But we aren't a significant cohort. As we fill the orders and buy up second hand boats coming on to the market, the prices should be steady, or slightly declining with expectation of market bottoming, but will supply or demand run out first? And when? It's anybody's guess. I'd guess supply will out live demand and we'll see that really kick in with market adjustment downward by spring 2021.


I've been looking at lagoon 380 and 400s for a long while, and there's a lot coming out of Croatia, Greece and Martinique just now. Pretty tatty tired boats that need some corn to make them liveable, but those same boats last year were much less plentiful and much more expensive. Production cats in charter really kicked off a decade ago. Regardless of Covid we're due to see the second hand supply increase steadily. (Irma not withstanding).

Interesting point made about brokers inflating the price. With travel restrictions, brokers will become more essential to the sale process for both buyers and sellers. (even though they will continue not to live up to that trust). They do create hype but they also help owners be realistic about the value of their boats. So many private sellers live in a rose tinted bubble of how priceless their boat is, compared with market listings. But I do think brokers do chivvy the market along in whatever direction it's going. A lubricant to market movement. They are just as willing to encourage a hike in the price if the market can take it, or a discount if that's what's needed to get the sale.



The wider ecconomy has so far been supported by bailouts which are starting to dry up, and I think will evaporate before this medical crisis is over. That's where the scarring of the economy will happen. And that will effect the poor and the rich. But friparies like buying or keeping a boat will be among the first things to be shelved as the belt tightens. That's why on balance I think we're set to see a big drop in prices. Cheap boats being hit hardest. Certainly 30%. Maybe 50%. That's less likely but I don't think anyone can say now it's impossible. If you follow the tipping point theory of supply and demand, then a small imballance downwards will trigger a big discounting if people are desperate to sell, and given the overheads of boat ownership, they will become desperate.

It's already happening, but I think it will take a while for the market to really move. Firstly because it will take a while for owners to come to terms with lower valuations for their pride and joy, and secondly it will be a few months before the owners that are going to find boat ownership really onerous (the ones with debt on the boat, high mooring fees and a generally highly geared lifestyle) to hit that wall, but when they do they will firesale and that's what will drive the market downwards.


Owners will either sell cheap, or hunker down, with a few neglecting their boats along the way. Maybe in 5 years when covid is a memory, the market will more than rebound as the new-normal of teleworking allows many more people to live at sea, or avoid air travel by using boats.


All of that assumes we don't see a large second wave of infection. If we do, then boats prices will be washed away in it.



Only time will tell who's wrong or right. Fair winds everyone.