COMPARABLE SALES EVALUATION

Much as anyone would do when buying a used car, this method matches the target yacht with similar vessels currently on the market, adjusting for size, age and builder. Gross tonnage (GT) is preferred over Length Overall (LOA) as volume represents the actual usable living space. While length is the most prominent measurement, it can be deceptive.

But asking price, of course, is not value. Publicly available figures consist almost entirely of advertised asking prices, which can be realistic or optimistic. Who knows?

In the Galatea trial, the judge dismantled the expert valuer’s comparable analysis because the expert had cherry-picked his data: he arbitrarily excluded a high-priced comparable Riva listing, failed to make monetary adjustments for superior builder quality and calculated his market discount using distressed forced sales from banks.

FLAT-RATE ANNUAL DEPRECIATION

This approach takes a known original build price, and assumes that a superyacht thereafter depreciates at a fixed annual percentage throughout its life. A modest mathematical element gives the impression of a scientific approach. Yet this has to be the laziest and most unreliable approach of all—even if the original build price is known. Which it normally isn’t. In the Galatea case, the judge rejected this approach, stating that there is no such thing as a typical or expected rate of depreciation.

In fact, empirical research, calibrated on a statistically significant spread of brokerage listings, shows that depreciation follows a broadly predictable curve—decelerating over time—rather than a straight line. Interestingly, the figures show that top-end Northern European brands command a premium which, if expressed as a percentage of the new or near-new price, is permanent: the premium does not erode with age.

HEDONIC REGRESSION

This model breaks down the item being valued into its constituent characteristics (size, year, builder reputation, etc.), and assigns a negative or positive value to each. Once all the variables are fed into the equation, a value can be derived.

Regression is brilliant because it ensures that the key factors influencing value are all considered. But it is not infallible. Regression models measure how well a model ranks vessels across a fleet—it does not give pinpoint accuracy on a single hull. It does not capture current condition or the extent or quality of any refits. Neither does it reflect specific negotiation. And the model copes less well with less common characteristics, such as sailing yachts. The main point of weakness is that it is only as good as the information used to derive each element, and for that there is no substitute for information on real sale prices.

SUMMING UP

Valuing a superyacht is not an abstract science. Valuations must be rooted in reality: the true attributes and condition of the vessel, in the context of comparable actual sale prices. They are predictions, not prices. And a superyacht is worth what someone will actually pay for it, not what the owner hopes, not what the broker whispers and not what looks best on a policy schedule.