Expert Advice: Building a Yacht
When building a yacht, making the right choices early in the process can add significant value to your boat.
Pedigree is a concept that applies to a royal family or even a championship racehorse, and in the world of yachts, it can be an equally powerful conveyor of a yacht’s value. In the shorthand of yacht brokers, the greater the pedigree, the more the yacht is worth on the resale market.
“It’s not a formula but more an elusive quality that builders hope to attain,” says Bob Saxon, who has advised clients on more than 3,000 builds in his 35-year career as a yacht broker and president of several brokerage firms. “There are any number of internationally recognized brands in yacht building, but only a handful would earn the ‘pedigree’ distinction.”
Pick the Right Yard
In the world of custom yachts, the first consideration for pedigree is the yard where it is built. Generally speaking, European yards like Lurssen, Feadship, and Benetti, plus a half dozen more in the Netherlands and Italy, are considered the crème de la crème of bespoke yards, where the über-wealthy congregate in order to maximize the value of their yachts. The names of these yards carry brand recognition around the world.
But in the past decade, as an unusually weak U.S. dollar prompted more owners to look to U.S. shipyards to get more bang for their buck, several American custom builders have seen their pedigrees rise with the number of quality yachts they’ve produced. Trinity Yachts in Louisiana is probably the best example of this rise in the Stateside shipyard and at one point had more than 20 yachts either under construction or on order.
Delta Shipyard in Washington State, with fewer yachts under build, also became recognized as a world-class builder and is known for its expedition yachts of longer than 150 feet. Burger Boats in Wisconsin, though focused on smaller megayachts, has also moved from a respected domestic shipyard to a yacht builder with a strong international following. Others like Palmer Johnson and Christensen have also become global players. All of these American yards invested millions in infrastructure improvements to produce top-line megayachts. That surge in quality, combined with yachts that might be one-third cheaper than same-size offerings from Europe, is helping to boost the U.S. pedigree along with demand.
Of course, it’s also a global phenomenon. As the new oil barons from Russia and the Middle East clamored for ever-larger yachts, shipyards around the world witnessed an unprecedented demand. This year, according to ShowBoats International magazine, the number of longer-than-80-feet yachts on order surpassed 1,000 for the first time ever.
But as oil has gone into free fall in the last six months, many would-be owners walked away from their new yachts, leaving many of even the most prestigious shipyards with open slots. The moral of the downturn: It’s probably a good time to start a yacht build because these projects take several years, and by that time, demand is likely to be strong again with a shortage of new yachts on the market.
Pick the Right Designer
Beyond the shipyard, the yacht’s designer is critical to its pedigree. A yacht designer, unlike a naval architect, is more of a general stylist, giving a signature look to every custom project. There are probably a dozen yacht designers who have pedigree status, including Ron Holland, François Zuretti, Glade Johnson, Patrick Knowles, and Ed Dubois, and there are another two dozen trying to become household names. “Having Ron Holland design your boat in a no-name shipyard in New Zealand certainly adds tremendous value to it,” says Bruce Schattenburg, president of the Sacks Group, a Fort Lauderdale, Florida-based yacht brokerage firm.
Benetti, the world’s largest builder of yachts longer than 85 feet, certainly figured out the cache a known designer brings to a yacht. It hired François Zuretti to design the interiors of a series build—similar yachts built on the same hull—in order to raise the value. Owners could boast they had a Zuretti-designed yacht, even though it wasn’t a custom build, and get it two years faster than if they’d entered into a custom project. Zuretti, for instance, can turn an owner’s dream into reality with the use of specific hardwoods, stones, fabrics, and artwork. His signature style reflects both his refined tastes and the wishes of the owner.
Other designers, such as Ron Holland, have become known for their exterior work. Holland has designed the world’s largest sloop, Mirabella V, which was a technical marvel in itself, as well as other technically advanced sailing superyachts.
Even though the average yacht size has grown each year over the last decade, most owners tend to stay in the middle range (which has grown from 120 feet to 150 feet in the last five years) because that is the most active segment of the market. The largest gigayachts are certainly impressive marvels of technology, but the circle of buyers in the upper stratosphere is very small. So, when considering retail value, also consider the yacht’s size and health of the resale market. In this market, values across the board are depressed. But a yacht that has a larger potential pool of buyers can also command a higher price range.
Saxon also suggests planning to charter the yacht. “Even though it might not be your personal preference, suggesting to a potential buyer that the yacht has a history of performing as a bona fide business with income is a genuine plus and a sales advantage,” he says. The yacht will also become better known in the world of yachting—a plus since many first-time buyers charter yachts before purchasing them. That means that the layout should be friendly to a group of guests and accessible to a larger crew that has to serve those guests. Owners who cruise with significant others or a small family will have to consider perhaps a less personalized interior, with more open spaces and staterooms.
Add Some Class
Yachts built to a specified class like Lloyd’s of London or Det Norske Veritas in Norway mean that they meet international regulations on the actual build process, while the UK’s Maritime and Coastguard Agency (MCA) designation allows it to be hired out for charter virtually anywhere in the world. Though building to class involves a significantly higher amount of initial investment, it literally opens up the world when the yacht goes to be resold. Many U.S. owners had no interest in building to class until recently, when the weak dollar brought Europeans and Asians in droves looking for a bargain in brokerage boats. Having a name like Lloyd’s or MCA on a yacht raises its value.
It Doesn’t Have to Bleed Blue
While establishing a blue-blood pedigree makes sense for a custom project, most yachts are either series or production yachts. At that point, it comes down to which brand is best in any given niche. Bertram and Hatteras, two venerable names in sportfishing, won’t ever build a yacht with a pedigree. In other words, the names on the transom won’t ever be household names in the yachting world because they are not custom-built?but their brand names bring higher resale value when compared to lesser-known builders in their categories.
Of course, there’s a caveat to that, too. “You can build the most expensive boat of a specific brand that has ever been built, with gold-plated engines and all the options,” says Schattenburg. “But that’s like building a $5 million mansion in a neighborhood with $500,000 homes. You won’t get what you put into it because it’s just not that type of neighborhood. The same with a specific brand of boat—it will command only a specific resale value. Too high, and it was a dumb investment.”