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A brief insight into the New Build market.  

It was a hot September day at the Monaco Yacht Show in 2008 when he got the call; “Jonathan, I want to back out of the deal; I do not want to buy a yacht which will be worth 30% less a month down the line, potentially I could be down as much as 50%, who knows. I can either back out of the deal without penalty after a 4 hour sea trial which would come at the expense of the current owner, or we can do it now; I suggest you need to speak to the seller.” That call set the tone for many of the world’s yacht brokers and dealers for following pain filled years to come. The FTSE would plummet 31% by the end of 2008 and the global liquidity of wealth would freeze. Brokers were no longer riding high, many were sitting on half built yacht orders and the value of many vessels were falling through the floor.  The yachting industry had been stunned into submission, it was Armageddon. 

What is really astonishing is that pre 2007 whilst the world was still booming and wealth was being circulated with great ease, there were globally around 250 shipyards building yachts of 30m plus and there were an estimated 777 yachts either under construction or ready for delivery. 

During the turbulent years of the credit crunch, many of the remaining yards, were forced to close their doors, and others obliged to diversify into refits or other activities just to keep going. Today, thanks to a series of adventurous entrepreneurs and management buyouts, of the original 250 builders, nearly 200 have survived and are ready to meet the orders of a recovering economy. 

It is estimated that in 2015, 734 (39 m average) yachts will be at some stage of their construction process, of which 269 (38.9 meters average) of these yachts alone are being built in Italy. The Dutch have the second highest level of orders with 76 yachts (56.1m). Feadship and Amels are both scheduled to deliver 12 new yachts each this year, whereas Azimut-Benetti plans to deliver a staggering 66. The diversity in build quality, pricing level and design is as diverse as the brands themselves – one is good, the other is exceptional.

So from a buyer’s point of view, if you are considering a new build; where should you go and how should you go about it? Should your loyal Captain oversee the build or should you appoint a Surveyor, a firm of Surveyors or look at the services of a Management company. Then what about your broker, who may well have helped you get to this stage in the first place, what will his role be in the new build? There are a few fundamental decisions which ought to be addressed before approaching the idea of building a new yacht, with some professionals offering differing views as to the best solution for what should be a hugely enjoyable process. 

Let us assume that we have a client who is hypothetically looking at a 60 meter new build motor yacht, and for simplicity’s sakes we will set a budget of € 80,000,000. We have been informed that the yacht needs to be delivered within 48 months in time for the grand celebration of the client’s 20th wedding anniversary. A fact worth noting is that around 88% of new builds are sold experienced owners. For the sake of illustration, let us look at a fairly diverse range of yacht builders: Feadship, Benetti, Mondo Marine, Sunseeker and Icon.

Taking each in turn, an enquiry to Feadship, tell us that it will take approximately 3 months to finalise the draft of a 100% custom design, the budget we have been set of € 80,000,000 is achievable, on the provision we stay away from Hydrogen powered generators, too much glass in the hull and do not have a metal flake finish.

Benetti, have stated that despite their mammoth order book they can schedule a new 60 meter motor yacht, built from either GRP or steel with a start date of 2016 which will take only 24 months to build. 

Mondo Marine currently has 5 yachts in build, ranging in length from 42m up to a flagship 60m. Depending upon which of these builds comes to market and upon the buyer’s final specification, Mondo Marine are putting the current ballpark cost in the region of € 60 million for a 60m and are confident that it can be delivered in the spring of 2016. 

Sunseeker, formally specialising in motor cruisers up to 80ft, are now capturing a sector of the superyacht new build market, with their M/Y Blush, a 48m semi displacement yacht built from GRP, which was launched in 2014. Sunseeker currently have one of the largest order books in Europe with 10 yachts from 28m scheduled for delivery in 2015. 

Icon yachts, are a fairly recent addition to the superyacht market, claim they can deliver Dutch build quality in a fraction of the time of their neighbouring yards. Their € 63 million Icon 225 has an expected delivery time of only 32 months and their current flagship Icon 300 costing € 99 million can be delivered in 36 months, all with exceptional build quality and finish due to their unique modular build process.

Let us say you have chosen a yard, your next big decision is to decide who do you want overseeing the build? With any significant purchase in life, you want to know you are dealing with the best, practitioners who are the top of their game. A traditional option for buyers has been to employ a knowledgeable Captain to oversee the build, which on the face of it may seem a logical option. Sure, the Captain may have years of maritime experience behind him and may feel they know their owner well; a more objective view might be that a Captain usually wouldn’t be the most appropriate for the job. Years of construction can prove a long time and continuity is a huge factor; spending this time constantly away from home and family coupled with living in a shipyard will take its toll on a personal level. It would be far more advantageous for the Captain to maintain his current post and ensure an owner’s present yacht is kept at the highest standards to maximise both the client’s yachting experience and the potential sale price when the time comes to sell it on. It is also debatable whether a Captain will have sufficient experience or the technical expertise in yacht construction to be left with the responsibility to oversee and run a new build. 

Perhaps a better option is to find a well-established and respected Management Company: they will have their own Technical Team with a wealth of experience with new builds. There will also be a thorough audit of materials and procedures throughout the build process. The fee charged by the Management Company should be recouped through their services in efficient negotiation with 3rd party suppliers, minimising unnecessary build costs, and reducing the need for the dreaded warranty work (which often arises from poor management) after delivery. Another option could also be to employ an Independent Surveyor or firm of Surveyors. You can guarantee that the yard will have their own to revoke any disputes you may rise, it is therefore essential that each step of the build meets the Surveyors standards, and any imperfections are noted and corrected at the earliest stage possible.

The perception and lifestyle of a Yacht Broker has largely changed for the better during the last five years, in general terms if they are not good at their job, they do not survive in the industry. Many brokers nowadays are degree educated and have in-house training for a period of years before being let loose on clients on any level. The broker should be able to use their vast industry contacts to help you negotiate with the shipyard, Management Company, or the independent surveyor to ensure that you have the best skills for the best prices possible. Brokers from responsible and well respected institutions also have the collective experience from their colleagues to fall back on, where one potential broker may not be specialised in a particular field, his colleague may have the required knowledge which may prove invaluable. It is also not uncommon that due to a broker’s exposure to a vast spectrum of yachts, they are often able to point out (from a client’s user experience point of view) aspects and ideas which enhance the build. The traditional role of a broker, to join parties together to allow for a smooth and effortless transaction, becomes a paramount role when entering into a new build. Many brokers make it their business to familiarise themselves with a range of builders in order to be able to advise their client as to the most suitable solution for them. 

The superyacht new build market is clearly still vibrant, and looks as if it is destined to continue growing in the coming years, opening new opportunities and ideas to yacht owners. The importance of taking the time to lay down the correct groundwork and have the appropriate team in place is a priority before embarking on a new build. Superyachts in today’s market are finished to a level which often exceeds the client’s expectations; however depending on the specification and design desired by the client, factors such as the budget, build time frame, and location of the yard can vary significantly with each individual build project.