About 70 percent to 75 percent of the Earth’s surface is covered in water. For condo developers, this means that something less than 25 percent to 30 percent of the globe can be stacked with residential units. And the percentage of available, developable waterfront property is far scarcer.
Then again, what if condos could float? It’s easy enough if you build them on a boat, and it’s already happening – there are several examples of built and proposed ship-based residential projects that cater to folks who relish life at sea and have money to burn.
To sell these units, promoters are using glitzy Web sites that gush glowing imagery of lavish living and travel adventures. And while the land-based condo boom has subsided in some previously hot markets, these oceangoing projects seek to stir up new waves.
There are tradeoffs for this seafaring lifestyle. While promoters say there are plenty of advantages to ship-based condos, such as free meals and built-in travel, the monthly maintenance costs can be high and ships tend to depreciate in value and will eventually be taken out of service.
“The World,” a 12-deck, 644-foot cruise ship that has 165 residential units, is a pioneering ship-based luxury residential community. Units aboard The World range from a 290-square-foot studio unit to a three-bedroom, 3,242-square-foot apartment. The ship was completed in 2002, and residents purchased the vessel in October 2003. According to a fact sheet, residences range from $825,000 to $6.3 million, and the units were 95 percent sold as of November 2005.
Remaining units carry a sale price ranging from $1.3 million to $3.6 million, according to ResidenSea Ltd., the independent management company for The World. There are also monthly fees to support maintenance and operation of the ship. The ship typically has an average occupancy of 150-200 residents and guests and a crew of about 250. There are four restaurants aboard The World, as well as a tearoom, deli, library, bars, casinos, two swimming pools, a full-size tennis court, golf simulator, jogging track and retractable marina, among other facilities.
The ship, a so-called “private residential community at sea,” has an international itinerary and spends an average of 2 1/2 days in each port. The ship’s scheduled stops in January include: San Juan, Puerto Rico; Grand Turk, Turks and Caicos; Freeport, Bahamas; Key West and Tampa, Fla.; Galveston, Texas; Tampico and Veracruz, Mexico; Belize City, Belize; and Grand Cayman, Cayman Islands.
Most of the residential units aboard The World area available for rent, according to ResidenSea. Renters must stay at least six nights, with rates starting at $1,200 per night, including food, port charges and gratuities.
Then there is “The Orphalese,” a proposed luxury liner with 200 condo units priced between $1.8 million to $10 million, plus $2,500 to $6,500 per month. Planned units range from 1,000 square-foot, two-bedroom units to four-bedroom penthouses. Food, medical care and utilities will be included in the monthly fees. The ship will also feature 265 suites for cruise passengers.
John L. Letham, senior vice president of business development for Orphalese Global Strategies Inc., a company that is promoting The Orphalese project, would not reveal how many of the units have been sold to date. To boost sales, company representatives are planning to appear “at a number of prestigious yacht clubs over the next few months. Now we think we’re ready to take this on the road,” Letham said. Last year, the company focused its sales effort in landlocked Las Vegas, a city that had seen an explosion in planned high-rise condo projects over the past few years.
Letham said that The Orphalese is definitely competing with land-based residential condo projects for buyers. “We do see some of the competition being land-site high-rise condos. The only problem … (those) don’t move.”
Construction of the ship will take about 24 months to 26 months, and it’s expected to sail in 2008. He wouldn’t reveal the status of the construction. “There are several things we are not allowed to discuss right now,” he said. The ship’s name is borrowed from a mythical city in “The Prophet,” a book by Kahlil Gibran published in 1923.
The Orphalese will be retired after 50 years, and “put into dry dock at a ‘leading city of the world’ to become a floating hotel/condo,” Letham said. If the project fails to get off the ground and into the water, Letham said that money will be returned to the prospective resident-owners. “All deposits are held in trust,” he said. Orphalese Global Strategies Inc., the agency that is spearheading the residential ship project, has ties to Beijing and Los Angeles.
The Orphalese is expected to be in port for 200 days each year, with the itinerary including stops for such international attractions as the Paris Air Show and Cannes Film Festival in France, the Sydney Opera in Australia, England’s Wimbledon, Spain’s Running of the Bulls, the Dragon Boat Festival in China, and Brazil’s Carnivale.
A development group in Arizona is promoting yet another high-end project, the Magellan Residential Cruise Ship. Randall B. Jackson, a real estate developer and luxury motor yacht dealer, is leading the management team for the Magellan.
Remaining units aboard the Magellan range from $1.88 million plus a $96,000 annual assessment for a two-bedroom unit to $8 million plus a $245,000 annual assessment for a four-bedroom unit. The ship design calls for an on-board helicopter, a 450-seat theater, nightclub and lounge, greenhouse and a private marina.
And then there is the more budget-minded Condo Cruise Lines proposal for a series of more affordable ships that convert mothballed cruise ships into residential vessels.
Mark Boyd, the visionary behind Condo Cruise Lines, said he hopes to launch a fleet of five condo ships. The first planned ship can carry about 460 passengers and 165 staff, he said. Plans call for a total of about 135 condo units, and 55 rooms that are rented to the general public through travel agencies. A condo association will own the ship, he said, while non-owner vacationers will foot the tab for the estimated $12 million to $15 million annual operating expense.
Units will range in price from $349,000 to $529,000, said Boyd, with annual fees ranging from $7,000 to $10,000 a year. A number of condo investors have expressed interest in the project, Boyd said, and he said the $10,000 deposits to purchase units are “totally refundable with interest.” The first ship is about 10 percent sold, he said.
As with other proposed sea-condo projects, the units will be fully furnished to meet safety standards. Because the ships that Boyd is targeting for his planned condo fleet are used, they probably won’t last as long as a new vessel. Boyd said he estimates that the ships could last 20-40 years. Once the ships reach the end of their useful lives, they will be parked “in some really exotic location somewhere in the world” and will serve as a hotel, he said.
Unlike land-based condos, the sales of the ship units are not technically considered real estate transactions, Boyd said. Rather, it is a real property transaction, in essence buyers own “a tin box in the midst of a ship that goes to sea,” Boyd said, adding that you don’t need a real estate license to sell the units. Even so, some real estate agents are specializing in the sale of these properties.
“A lot of agents and brokers have gone nuts over this. It’s fresh new inventory for them. They’re easy to sell, and investors (can) make a lot of money,” he said. “It’s just like pre-construction condos.”
Boyd has an aggressive schedule for the first ship – he expects it will launch by the end of summer. “I think we’ll have three of the ships sold within the next year and five within the next two years.”
It was just six months ago that Boyd, a former crewman on a Navy aircraft carrier who more recently has performed graphic design work for real estate developers in the Destin, Fla., area, began to research his plan for a group of condo ships. And his company’s Web site was “not officially operational yet” as of Jan. 17, according to text at the site.
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