June 30, 2006

Cruise Ship Condos

Making your home on the high seas

My home town of San Francisco was recently rated the 3rd most expensive city in the U.S. and the 34th most expensive worldwide. These rankings change frequently, but clearly this is among the places that put household budgets to the test. It’s also one of those places where conventional real estate wisdom breaks down: ordinarily it’s cheaper to buy a house than to rent—but not here. I couldn’t begin to afford a monthly mortgage on my current home, and that doesn’t even take into account the down payment. Although my wife and I have fantasized about buying a home, our income would have to rise dramatically to make that a possibility in this town. This is equally true when talking about houses or condominiums, but condos hold little appeal for me anyway. Even though they might cost a bit less, you pay monthly fees for maintenance of the building and common areas; yet you get less privacy and have less flexibility in how you can use or modify the space.

On the other hand, I love to travel, though the high cost of housing limits the number and length of trips we can take. So I was intrigued by a notion that has sprung up in several forms over the last few years: selling cruise ship cabins as condos. Roughly speaking, the sales pitch is that for just a bit more money than you’d pay for a luxury condo, you can travel the world in style without leaving home—or spending extra on airfare and hotel accommodations. In other words, if you were thinking about buying a condo anyway, if you like to travel, and if your work and lifestyle don’t tie you to a particular location, you can have your cake and eat it too.

Liquid Assets
I oversimplify, of course. For one thing, your average working middle-class couple—an ideal target market for a conventional condo—might run into difficulties living on a ship beyond merely paying for it. Most jobs require employees to show up at a particular location, for instance, and a ship could be less than ideal if you’ve got school-aged children. So retirees and the excessively rich are among those most likely to purchase a condo on a ship. On the other hand, living aboard a ship for a month or two at a time is well within the means of many ordinary, working citizens, and in some cases one can buy fractional ownership of a cabin—very much like a timeshare. Even those who purchase a cabin outright generally maintain land-based homes as well, and spend only a few months of the year on the ship.

When I say “cabin,” by the way, don’t think I’m talking about an ordinary ship’s cabin—as in a smaller and less comfortable hotel room. On the contrary, the homes you can buy on a ship range from simple studios to expansive penthouse suites with four bedrooms, four and a half baths, sweeping verandahs, and every conceivable amenity. Most units have kitchens, though of course you’ll be somewhat limited in where you can shop for groceries. But naturally each ship has numerous restaurants as well, so you needn’t do your own cooking at all.

As just one of 200 or so owners, you’ll have little if any influence over the ship’s itinerary. You can be assured that, over the course of two or three years, your home will visit nearly every major port on the planet, though. Some residential ships make a point of being in Cannes for the annual film festival, in Rio for Carnivale, or in other seasonally appropriate locations. But between ports, tenants may find the range of activities onboard a bit limiting; these ships have fewer shops, shows, and other diversions than vessels of similar size that cater to vacationing tourists. In addition, you’re bound to miss certain conveniences of home, such as a choice of medical and dental facilities, your favorite local businesses, and the proximity of friends and family. On the other hand, you won’t need a car, and you can hardly offer a more attractive vacation getaway for visiting guests.

A Titanic Investment
As of 2006, only one residential cruise ship is already sailing the seven seas: a ship called The World, which launched from Norway in 2002. Several of its units are still available—with prices ranging from US$825,000 to $7 million, plus a 6% annual fee to cover maintenance, utilities, landing privileges on the ship’s helipad, and so forth. If you’re not ready to commit to ownership, you can rent a unit for anywhere from $1,200 to $4,200 per night. The ship features the usual luxuries, such as a casino, a theater, upscale restaurants, and a spa. Unlike ordinary cruise ships, The World typically spends two to five days in each port, giving tenants plenty of time to explore the world off the ship. The itinerary changes each year.

Three other major residential ships are in various stages of preparation. The Four Seasons, a ship owned by and named after the hotel chain, is selling units now with plans to launch in the fall of 2007. Prices go as high as $15 million. On the Orphalese, scheduled to set sail in 2008, you can buy a small, two-bedroom suite for as little as $1.8 million (plus $2,500 monthly); their largest and most luxurious four-bedroom units start at $8.8 million (plus $5,500 per month). And a ship called The Magellan is already selling condos even though construction hasn’t yet begun; the 200 units are priced from $1.8 million to $8 million (with a fractional one-month ownership for as little as $156,250). One perk on the Magellan I find quite appealing is an observatory with an astronomer on staff.

Because I’ll probably never have the sort of money that would make owning a cruise ship condo even a remote possibility, I can’t say whether it would be worth the expense. In some respects, you undoubtedly get what you pay for, but then, I don’t really want or need to be surrounded with luxury all the time. If someone came up with a middle-class condo ship that a mere mortal such as myself could afford, though, I’d certainly consider taking my home with me as I travel the globe. —Joe Kissell

More Information about Cruise Ship Condos…

Just a few days after this article was published, Condos for sail by David Armstrong appeared in the San Francisco Chronicle. Coincidence?

To learn more about living on a cruise ship, start with the official sites for the four major vessels either sailing now or being built: