Definition: A speculative superyacht build refers to a yacht of which the construction is started by an entity with the intention to sell the project over the course of the construction.
To say that building a brand new superyacht is no small feat is an understatement. 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. 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, in some cases, years off the lead time - benefits that no one can deny are attractive.
From the perspective of the shipyards and despite the element of financial risk involved, building superyachts on speculation has become a very solid business model in the superyacht industry. Though the number and size of the speculation projects has increased as the business has grown and progressed over the years, this is, in fact, not new. As an example, it was more than 20 years ago that the original owner of the 50 metre Amels motor yacht Tigre D'Or ordered a second yacht so he could sell it at a profit, which he successfully did, and in the years to follow he continued to build vessels with the intention to keep on selling. Other examples include the Lürssen projects Marlin, Nemo and Shark (67, 70 and 70 metres respectively), which were ordered more than 10 years ago by an American property developer, who then sold two of the yachts and kept one.
The major difference between the aforementioned projects and the speculative projects of today is that nowadays the large majority of these projects are begun by shipyards and their investors as opposed to clients. Here we ask some of the most important speculation builders why building on spec is the right choice for them.
Our business model relies on building spec yachts - we believe it is an added value to us and, of course, the client who will not have to wait up to four years for a new vessel. Besides the time factor there is also an economic factor since the initial process of a spec yacht is much more streamlined then a full custom build that will require many more development hours, mostly generated by the clients/client’s team specific requirements.
The challenges are like in every other industry that wants to sell a product - try and foresee which characteristics will be the most appealing to the largest amount of people - only that our market is extremely small compared to most other markets, so the number of potential customers that can afford to buy a large yacht is comparatively smaller. To ensure our success in the business we do a lot of market research, including technical solutions and design input from a variety of world renowned designers such as Andrew Winch, H2 Yacht Design, Nuvolari Lenard, and Vitruvius... to name but a few.
Yachts built on spec are an integral part of Hessen's commercial strategy. In fact, we were one of the first shipyards to develop yacht models with this in mind – the 37 metre semi-displacement range was engineered in this spirit. Spec-built boats are also an integral part of our success, every year we have two ready to offer. We conduct market research to choose what we will build.
There are many advantages to a spec built yacht, beyond the shorter delivery time. Owners get a proven platform and perfected engineering, while still having a great degree of customisation as the project is conceived so that clients stepping in at certain stage can make significant changes so that the new boat perfectly fits their lifestyle.
Building on speculation doesn’t mean keeping to the status quo. Heesen pushes innovation on its spec builds, such as the 50 metre Project Nova, which will be the world’s first FDHF superyacht with hybrid propulsion. Heesen Yachts are continuing to grow in size. We started with 37 and are now in the 50 to 55 metre range, and thinking of 60 metres!
Building on speculation is key to our business. It keeps costs down with large investments in hull design, tooling and process flow to ensure first-time-through accuracy, as well as superior fit, finish and detail. It also assures that delivery is on time and on budget, every time.
Challenges involving in building on speculation include large costs involved if the yacht is not spoken for, and regulating our production schedule to meet market needs. We definitely believe the size of speculation builds will continue to grow to yachts over 70 or 80 metres. We have seen with our buyers how many have progressed through our model range from 34 metres, then to 40 metres, and then up to a 50 metre vessel - and now they are moving up again.
This article was first published in the issue 10 of the SuperYacht Times newspaper. Subscribe now and never miss another issue.