Money doesn’t buy happiness, but it can buy a superyacht—which is pretty much the same thing. So, how much money are we talking about? Since superyachts are the ultimate impulse buy, isn’t trying to put a price on them like trying to put a price on a cloud?
It’s easy to look at a superyacht and assume that, given how much money is spent on it, the owner has lost track of the cost or simply doesn’t care anymore. Whether that’s true or not, others need to know how much a superyacht is worth—not the cost of construction, not a yacht broker’s initial asking price, but its current intrinsic value.
Who wants to know?
Superyacht insurers need to know this—and they need to know it precisely. Policies can be based on an agreed value or a “sum insured.” In the latter case, this represents a liability limit, and the actual value is only taken into account when a loss occurs. In the landmark Thor II case, the owner believed that specifying a sum insured of $1.5 million in the policy terms was equivalent to an agreed valuation. The court held that the insurers were liable only for the vessel’s actual market value at the time of the loss: a meager $800,000.
And what happens when the value is agreed upon, but the owner deliberately provides a figure that is far too optimistic? That doesn’t end well either. In the famous Galatea case from 2015, the owner of a Riva 115 motor yacht insured it for an agreed value of 13 million euros, despite having market appraisals that placed its value between 7 and 8 million. The vessel was destroyed by fire. The court held that failing to disclose the lower market valuations—even if done innocently—constituted a material misrepresentation that entitled the insurers to void the policy entirely. The owner received nothing.
The more a boat is worth, the less likely you are, as the owner, to want to see that much capital tied up. You’ll know what the return would be if you invested it in one of your businesses. That’s why financing makes sense. Banks want auditable and verifiable figures to justify their loan-to-value ratio, which ensures that their loan is adequately secured, with periodic appraisals to avoid ending up with negative equity if the market crashes. Tax authorities also require appraisals. And let’s not even get started on divorce courts.
Over the years, the maritime industry has developed various valuation methods. Some are more useful than others.
Valuation Based on Comparable Sales
Just as anyone would when buying a used car, this method compares the yacht being appraised with similar vessels currently on the market, adjusting for size, age, and shipyard. Gross tonnage (GT) is preferred over overall length (LOA) because volume represents the actual usable living space. Although length is the most visible measurement, it can be misleading.
But the asking price, of course, isn’t the actual value. Publicly available figures consist almost entirely of advertised asking prices, which may be realistic or optimistic. Who knows?
In the Galatea trial, the judge rejected the comparative analysis by the appraiser because the appraiser had cherry-picked the data: he arbitrarily excluded a comparable listing for a high-priced Riva, failed to make monetary adjustments for the superior quality of the shipyard, and calculated his market discount based on distressed sales by banks in financial distress.
Fixed-Rate Annual Depreciation
This approach starts with a known original construction cost and assumes that, from that point on, the superyacht depreciates at a fixed annual rate throughout its entire lifespan. A modest mathematical component gives the impression of a scientific approach. However, it must be the laziest and least reliable method of all, even if the original construction price is known—which is usually not the case. In the Galatea case, the judge rejected this method and stated that there is no typical or expected depreciation rate.
In fact, empirical research—based on a statistically significant sample of brokerage listings—shows that depreciation follows a more or less predictable curve that slows over time, rather than a straight line. Interestingly, the figures show that high-end brands from Northern Europe command a premium that, expressed as a percentage of the new or nearly new price, is permanent: it does not erode with age.
Hedonic regression
This model breaks down the asset to be valued into its constituent characteristics (size, year of manufacture, shipyard reputation, etc.) and assigns each one a positive or negative value. Once all the variables have been entered into the equation, a value can be obtained.
Regression is brilliant because it ensures that all key factors influencing value are taken into account. But it is not infallible. Regression models measure how well a model ranks boats within a fleet; they do not provide exact accuracy for a specific vessel. They do not account for the current condition, scope, or quality of renovations. Nor do they reflect a specific negotiation. And the model performs worse with less common types of vessels, such as sailboats. Its main weakness is that it is only as good as the information used to derive each component, and for that, there is no substitute for actual sales price data.
In summary
Valuing a superyacht is not an abstract science. Valuations must be based on reality: the vessel’s actual attributes and condition, in the context of comparable actual sale prices. They are predictions, not prices. And a superyacht is worth what someone is actually willing to pay for it—not what the owner expects, not what the broker suggests, and not what looks best in the terms of an insurance policy.
This article does not provide or replace legal advice.
