It’s a lifelong dream for many – and may well be on your ‘to purchase’ list – but understanding the cost of running a superyacht is essential to make that dream reality, says Stuart Bray, a superyacht expert working with Insure4Boats. www.insure4boats.co.uk
Despite current global economic challenges, the luxury yacht market is booming. The appetite for British-made vessels saw a 33.2% increase in exports in the past few years, according to a report by British Marine – but what is not so clear, given the exclusivity of the market, is the finances needed to buy, maintain, and enjoy such a superyacht. Think you are ready to get on board? The following figures will make even the strongest sea legs weak at the knees.
In the beginning
“Building a custom superyacht costs £1.5 million per square meter on average and takes three to four years to build,” begins Stuart. “It starts with the exterior and interior design, then a shipyard is chosen. From there the hull is constructed. Next comes fitting of the engines, running gear, water treatment, air conditioning and pumps. The superstructure is then built and attached to the hull. This is before the interior fit-out takes place and the exterior is painted. Sea trails are then carried out before the yacht is handed over for warranty work.” Not prepared to wait? Buying second-hand is a very sensible option. “Many prospective owners choose to purchase a second-hand superyacht. It costs around £20 million on average, but increases dramatically if customisation takes place. Fitting out a new or used vessel costs around £35 million, but this can varies depending on size.”
Overall spend
Get your numbers straight before taking the plunge. “In general, the overall operating cost is now 20% or more of its original price. So, a vessel costing £1 billion pounds will set you back £200 million per year after paying for fuel, dockage, crew, maintenance, insurance and so on. A decade ago, the operating cost was around 10% of a vessel’s original price. This demonstrates a huge increase in running costs due to soaring inflation.”
Financing fuel
And while fuel costs have always been eye-watering, today’s superyacht spend is astronomical. “Fuel is one of the biggest superyacht costs, starting at £2,000 per hour and over £24,000 per overnight cruise. For example, a 70-metre vessel is estimated to use around 500 litres of fuel per hour, and while annual fuel costs were estimated at around £327,000 back in 2012, they are now estimated to hit over £420,000 in the current climate.”
People power
Next, you need to think about a key factor in yachting excellence – your staff. “As a general rule, a 60 meter yacht will have a 16-person crew, setting you back around £1.2 million per year based on industry-standard pay rates. Owners of superyachts of 100 meters and beyond will pay significantly more to staff their vessels. These can vary from the skipper’s salary of around £12,000 per month, to the stewards at around £4,000. Typically, these salaries would not be subject to tax at source”.
Operating and maintenance
So how much cash will it take to keep your boat ship shape? “The annual operating costs of a superyacht is around 12% of its original cost for the first four years, 15% for the next three years, and 20% annually from then onwards. They must come out of the water every five years for maintenance such as painting, underwater work, gear checks, and antifouling. This basically equates to 10-12% of the vessel’s original price. So, a superyacht that costs £1 billion would require around £1 million of maintenance work a year.”
Insurance
Such a hefty investment demands sound insurance, and here, shopping around will help immensely. “Insurance costs are difficult to pinpoint as many factors determine what you will need to pay, such as value, cruising area, and usage. Again, as an example a superyacht costing £1 billion could cost £8 million or more to insure. Fire, theft, loss of tender, onboard injury, and collisions are the most common claims received from yacht owners, according to Insure4Boats data.”
Marina dockage
“Finally, always keep in mind the fact that superyacht costs go far beyond the initial build or purchase price, especially when used as a base for luxury holidays or experiences such as the Cannes Film Festival. A two-week holiday in Marbella could cost you £60,046 in dockage alone, without considering the cost of fuel or refreshments. It’s easy to see how superyacht owners can rack up almost £300,000 in dockage fees per year on average.”
