The Cost of Xenophobia
A majority of Americans that want to purchase a yacht come to South Florida. South Florida has more yachts per square mile than anywhere else in the world; however this higher demand for yachts pushes the price higher than what it should be. This phenomenon follows the rules of supply and demand. In fact, find a brand you like and check out the asking price between South Florida and North or West Florida and you will often find differences of ten percent. Florida yacht brokers know this which is why they price their yachts outside of South Florida lower… just to get foot traffic.
4,868 miles from Fort Lauderdale, you can sometimes find the same yacht in Nice, France for 30% less. Or, 5,967 miles from Miami in Istanbul Turkey, that same yacht can be 40% less. It’s ironical that almost every American will jump at the chance to pay thousands of dollars for a Mediterranean cruise, but more than 90% of yacht buyers will not fly to the Med to save several hundred thousand dollars to buy a yacht. Actually, it’s not surprising. If a yacht buyer from Akron, Ohio flies down to Ft. Lauderdale to look at a half dozen to ten yachts, it’s hard for the broker to drive him to Jupiter or St. Petersburg Florida to see the same year and brand priced lower. Yacht brokers are a little bit like other professionals that charge by the hour; time is money…so let’s keep it short and stay in South Florida.
Time is a factor that keeps yacht brokers in Florida. But, the fear of things foreign pushes Americans to buy in America first. But, is this wise considering the supply and demand variables that impact the price of boats: location, volatile currency exchanges, and economic fluctuations.
Boat yards, whether they are American, Italian or English, sell their boats internationally and as a consequence of fluctuations in currencies, the relative price of boats’ asking prices change over the years. Four years ago, the exchange rate between the Euro and the dollar was at 1.40. Today, at the time of this writing it is 1.09. This almost 30% difference can make you money instantly. Furthermore, because of the different levels of economic activity where certain countries come out of recession before others, this can also change the supply and demand of yachts based on their location. The combination of exchange rates and country economic conditions provide financial opportunities for Americans to buy exactly the same boat in another country for 30% to 40% less.
Of course, American boat dealers do not like this. They have created a term called “gray market boats” to scare away yacht buyers from looking internationally. In fact, there is no such thing as a GRAY market boat. An Azimut is an Azimut is an Azimut where ever it might lie. And the difference between 50 or 60 hertz is insignificant and inexpensively overcome. The difference between looking at boats in the Med and in South Florida is the price of the airline ticket…nothing more. And, documentation specialists in South Florida transfer boat titles between foreign and US flags routinely; it’s as easy as registering your car at the DMV. The only cost difference is transporting the new yacht from the Med to Florida, which is usually less expensive that taking the same boat from the US east Coast to the US west coast.
Buyers of 120-250 foot yachts know this. They are obliged to shop internationally. However, American buyers of yachts between 50-120 feet are reluctant to shop internationally because of a xenophobic attitude about buying in countries where they don’t know the rules of the game. That attitude can cost you a lot of money. We routinely see yachts in the 50-120 foot size categories that are currently much less expensive in the Mediterranean basin than in the US and yet, most of us do not take advantage of that situation. We just sold a 55 Selene to an American citizen living in Florida that we purchased at $300,000 less than the same boat priced in the USA. However, he was originally from Belgium so maybe he wasn’t afraid to spend a week on the French Riviera to that end.
Our brokers have developed excellent contacts with brokers around the world and for us, buying a boat in France, Spain or Italy is as easy, and sometimes, less complicated than US purchases. If you have an interest in buying a boat as a major investment and would like to maximize the power of your dollar, contact us and let us show you the ropes.