A speculation superyacht build refers to a yacht of which the construction is started by a shipyard or an investor with the intention to sell the project either during the construction or once completed.
Nowadays, after the Covid-19 pandemic, you will find scarce shipyards with the availability of speculation yachts or stock boats. However, visionary investors have placed their money in new builds. It is no secret that speculation yachts are built for a profit.
The investment of time and money is substantial, and, for many, it will be a once-in-a-lifetime experience in which every day waiting for the end result is a relished part of the experience of building a boat. For just as many, however, the pros of purchasing a vessel built on speculation outweigh the cons drastically, saving both an incredible amount of money as well as knocking years off the lead time – benefits that are very attractive, particularly in the current market.
From the perspective of shipyards and despite the element of the financial risk involved, building yachts on speculation has become a very solid business model in the superyacht industry. The number and size of the speculation projects have increased as the market has grown and progressed over the past few years.
Nowadays most of these projects are begun by shipyards and their investors as opposed to clients. However, statistics show that as the size of the yacht increases, fewer yachts are built on speculation and a greater number built to order.
It is also worth considering the different types of speculation projects since we can class these as ‘complete builds’ and ‘hull only builds’. In the first case, the vessel is built entirely on speculation whether a buyer is found or not during the construction process, whereas in the second case, the builder opts to start up only the hull construction – saving approximately a year into the construction time and comprising a lower investment perspective.
Although certain yards base their business model on building solely to order – and only building what they class as ‘custom’ or ‘bespoke’ yachts – others use a combined model.
For some yards, the business model is to build ‘unique yachts for each of their clients’. This can only be done starting from a blank sheet of paper and they need the Owner (or project manager) to be involved from the beginning. Therefore, they can only build to order.
For other yards, market demand is crucial but unpredictable, which is the case now with plenty of Buyers looking for short-term delivery. Also, shipyards benefit from consistency and continuity in production, to give the necessary workload to their subcontractors and partners, and to safeguard their research, resources and know-how. Building on speculation allows them to maximise opportunities whilst maintaining efficiency and quality, whilst most European yards have abundant production capacity.
How these superyacht builders finance these speculation yachts is simple:
Although financially strong shipyards can finance or disburse money to invest in speculation projects by themselves, in some cases, the shipyard might rely on an investor to do this instead.
The perception that yachts built to order boast a greater pedigree than those built on speculation is arguable:
There is an element of truth in the fact that an asset specifically made for one individual has a higher perceived value, both emotionally, but also monetarily.
However, pedigree can also be sourced elsewhere, whereas speculation yachts are essentially the same structure with different interiors and options.
It all comes down to the perceptions and tastes of each Owner, and how soon they want their new yacht delivered.
Currently, Allied Yachting proposes several speculation yachts for short-term delivery: