New Construction Market

by Rupert Nelson, Director and Sales Broker, Monaco

To build or not to build? That is the question troubling many potential yacht buyers today. Through 2014, and particularly in recent months, the new build sector, in parallel with the pre-owned brokerage market, has experienced a tangible resurgence. After several years of slower but stable movement in the sales markets, Burgess has had one of its strongest years to date in brokered new construction business.

When building a new yacht you can expect a higher overall cost and longer wait for delivery than buying a comparable pre-owned vessel, so why would you choose to buy new? For starters, it is a lot easier than it has been in a long time. There are a number of benefits to buyers in the new construction route including, but not limited to:

- Manageable initial down payment or deposit
- Several similarly sized stage payments spread across the project’s build
- Increased capital protection
- Possible foreign exchange advantages
- Possible revenue from interest earned on money to be paid at a later date
- Financing opportunities

It’s clear to see why there has been resilience and recent growth in the new-build market as we come out of the recession. But are clients buying a different kind of new build yacht? And have shipyards adapted their business practices to match the market?

In 2014, Burgess’ brokerage team signed seven new build projects from 48m to 130m; four with Northern European shipyards, two in Southern Europe and one in the United States. Of these seven projects, just two are fully custom yachts. 

The remaining five are semi-custom ‘in-build’ brokerage vessels with reduced delivery times and attractive pricing, which is an interesting new trend.

The new build market has never been for the faint hearted, particularly when choosing the fully custom route. There are a dizzying number of decisions to make on specifications and design, and these are not without risk. Potential delays and cost overruns can be off-putting for some buyers, unless they dedicate an experienced team, like Burgess Technical Services to represent their interests. Equally, since the Global Financial Crisis there are an increasing number of alternative investment opportunities, outside of yachting, to distract potential buyers.

However, in recent years, the semi-production market has mitigated many of these concerns and the new build concept has experienced a wider appeal. It offers shortened delivery times; more efficient, improved production lines; increased quality control; reduced overall costs; and a degree of customisation to make the yacht ‘your own’.

Picking up on this growing market, several major, traditionally custom-only shipyards are now selling semi-custom yachts with delivery times of between a few months and two years. Potential buyers can now have it both ways; keeping their interests in other business opportunities, while taking on yacht ownership through stage payments.

There has never been a better time to investigate the new construction market, and Burgess, with 40 years’ experience and countless new build projects under its belt, is in the best possible position to provide accurate, intuitive advice.

Contact a broker for more information >>

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