Smart Buyer’s Guide to Residential Cruise Ships

Residential ships are a way to share expenses instead of owning your own private yacht. The concept seems reasonable, but there is some price gouging going on in the business.

The ship that started the current spate of luxury residential homes aboard cruise ships was “The World,” operated and managed by ResidenSea. All the residences onboard “The World” are already sold-out, but occasionally an owner puts one up for sale. If you have to ask the price, you probably cannot afford it.

Residential Cruise Line, LTD. Is offering 1 bedroom, 1 bath, 624 sq.ft. apartments on “The Magellan” for a mere $2,160,000. A 4 bedroom, 4.5 bath, 4334 sq.ft. unit will set you back $15,460,000 to buy and an annual maintenance fee of $542,000.

Not to be outdone, The Four Seasons Ocean Residences has units running from $3.75 million to $39 million, and sizes range from 797 square feet for a 1-bedroom unit to 7,860 square feet for a 4-bedroom unit.

The “Orphalese” plans to launch in 2008. They are offering 200 permanent residences ranging from the 1,000-square-feet, 2-bedroom Pegasus Estate to the 3,700-square-feet, 5-bedroom Penthouse, which are available for full ownership. The 2-bedrooms start at $1.8 million with $30,000 in annual fees, while penthouses start at $10 million with $78,000 in annual fees.

Voyage Partners has a ship under construction but has not announced pricing yet. When they do, the prices will probably fall in the range of the others in this short list of new residential cruise ships.
Another ship of this caliber is in the planning stages, it is to be named “Everest” and will be 656′ in length if or when it is built. It is to intended have 17 apartments and an owners private penthouse suite on the top deck.

“The Orphalese” is the best bargain of the bunch, and I think it is the highest quality ship too. “The Orphalese” is being built at the Aker Shipyards in Finland by the same builders who have recently built the biggest and best mega cruise ships in the world, including the largest of all cruise ships “The Freedom of the Seas” operated by Royal Caribbean. Also the management of “The Orphalese” seems to be practical. There will also be 265 guest suites available on the ship for cruise passengers who do not own residences.

Using the best of the bunch “The Orphalese” as a benchmark, let’s see how it stacks up against real world prices.

New cruise ships can be built for around $200 million. The most expensive new mega cruise ships cost about $500 million to build.

All the current prices of residences onboard cruise ships are exorbitant. Rich people apparently enjoy squandering their money. It must be a status thing to waste more money than the Joneses. For those who prefer to not waste money trying to outspend the Joneses, there is a better way.

Occasionally a cruise line may have a new ship under construction and run into financial difficulties. They may be forced to abandon the construction project, and an unfinished ship may sit idle in a shipyard. There are such ships available now. One in particular is as follows:

725′ 725ft./221m UNFINISHED 12 DECK PASSENGER VESSEL

Year: 1990

Current Price: US$ 15,000,000

Located in Mediterranean

Hull Material: Steel

Engine/Fuel Type: Twin Diesel

725ft./221m Unfinished 12 deck Passenger Vessel

Steel hull & superstructure built in Poland in 1990, length extended by 50m/164ft. in 1995 in Greece for the original owner who went bankrupt.. New owner not interested in completing the 13,000 ton (lightship) cruise vessel and it is now at the stage where in can be completed by our competent ship builders in record time as per Buyer’s specific requirements. Ideal also as a floating condominium project or ro-pax. The price “as is, where is” with engines, generators and other equipment on-board (see list below) is US$15 Million, or can be completed turn-key in 20 months for US$130,000,000. Lying in the Eastern Mediterranean.

The above listed “turn-key” price of $130 million is based on finishing the ship at the Elefsina Shipyard in Greece. That would not be a wise thing to do with this ship. Greek shipyards get very few new construction projects these days, and for good reason. The trade unionists in Greece are doing a very good job of improving pay, benefits, and working conditions of shipyard workers in Greece. Unfortunately they also slow down the work, and drive up the costs.

The asking price for this ship is less than the price for one large apartment on “The Magellan.” The asking price and selling price are two different prices. This ship could probably be bought for about 11 million dollars. It would be foolish to finish this ship in a Greek union shipyard. It can be economically towed over to the nearby shipyards in Tuzla, Turkey. The ship can be finished there quicker, and for about half the price and with better craftsmanship. This ship could be bought and finished to a high standard equal to “The Orphalese” for a total cost of much less than 100 million dollars (maybe even as low as 60 million). It can be finished to order, with each residential unit customized to suit its owner(s). The finished product would be a brand new completely modern ship with luxury homes onboard which would be at least as good or better than any on the market.

That still seems like a big chunk of change. But this is a big ship and it would easily accommodate 200 luxury residential units and an additional 200 or so conventional cruise cabins like “The Orphalese.” The average cost of the residential units would be less than $500,000. That would mean that the smaller residential units would cost much less than the average price. Also, with an additional two hundred (plus) conventional cruise cabins, the cabin owners could recoup much of the operating costs, and thus virtually eliminate the “maintenance fees” for themselves. The expense to owners can be less than 10% of the going rates if the buyers did not need to pay some slick promoters and salesmen, but just bought the ship directly themselves sharing the actual costs by dividing the ship ownership among the buyers. Why would anyone want to pay ten times as much money to buy, and much higher maintenance fees for a similar shipboard residential unit? The only reason I can think of is to impress others with how much money they can afford to throw away.

Used cruise ships are an even bigger bargain. Look at the specs for the following unfinished conversion ship for sale:

UNFINISHED YACHT FOR SALE

OWNERS PRICE USD1 MILLION

COMPLETE SPECIFICATIONS, GA AND EQUIPMENT LIST AVAILABLE

GREEK FLAG

BUILT ROMANIA / 1988

LAST IN DRY DOCK 1997

DIMENSIONS 116.40 X 14.20 X 5.20 METERS DRAFT

GRT/NRT 3430/2000

23 KNOTS INTENDED

HELIPORT INTENDED

ACCOMMODATIONS INTENDED FOR 81 GUESTS

CREW FACILITIES INTENDED FOR 93 MEMBERS

Again the asking price is subject to negotiation. Used ships can be refurbished to look practically new, and can be brought up to international safety standards (SOLAS). There are shipyards around the world that can do good quality work at even lower cost than the shipyards in Tuzla, Turkey. If a ship is currently lying in Greece (as many are), then Tuzla is the best place to tow it for major shipyard work. The “SE” shipyards in the Black Sea port of Nikolaev, Ukraine offers the best value for the money in that part of the world. The bottom line is that smart shoppers can get good deals, even on lavish purchases such as a luxury residential home aboard a cruise ship. I maintain a list of those who have expressed an interest. The list is confidential and will not be shared for any marketing purposes. The purpose of maintaining the list is to facilitate joint ownership directly between buyers without any middlemen or promoters involved.