Unreal Estate: Ship Condos Sail Choppy Seas

MIRAMAR, Fla. (TheStreet -- The high seas may generate the next big wave of high-end property buying.

The concept of selling residential units aboard a cruise ship first made a splash with the 2002 launch of The World, the only vessel of its kind. Others, however, have floated plans to capitalize on this unique real estate sector.

The World, managed by Miramar, Fla.-based ResidenSea, is a far cry from the standard vacation ships run by Carnival ( CCL) or Royal Caribbean Cruises ( RCL). The 12-deck ship is owned co-op style, by its residents. Prices start at $1.4 million for one of the 165 units set aside for buyers.

Since 2002, The World has travelled the globe as a residential community at sea.

The World is billed as a "city at sea" with four gourmet restaurants, a theater, a 7,000-square-foot spa, two swimming pools, a tennis court and a nightclub.

Many of The World's residents have as many as three or four homes around the globe, says Nikki Upshaw, ResidenSea's senior vice president of sales and marketing. Living on the ship allows them to maintain the creature comforts of luxury living while satisfying their love of travel.

"We make it fairly seamless to have this consistent level of experience, no matter where we are, whether it is Indonesia or Croatia or Italy or Antarctica," Upshaw says.

For those who can't quite pull away from their land-based businesses, all residents have high-speed Internet service and access to an on-ship business center. Some owners of two-bedroom units have made one room into a "home" office.

So far, the woes of the land-based property market haven't damaged the ship.

"We are immune to an extent," she says. "We have not had any defaults or what would be considered foreclosures. We are not a market where people can't make ends meet or can't afford this."

Still, the price per square foot on the ship has declined for rental and resale, Upshaw says. Buyers, who have the upper hand on land and sea, are also negotiating more aggressively.

That shift hasn't resulted in bargain-basement prices. The ship's largest apartment is on the market for $17.5 million. The 4,000-square-foot penthouse unit has six bedrooms, two living areas, two dining areas and two kitchens. The unit is one of a few to offer bow and port views, and two heated whirlpool spas on a 150-foot veranda.

Although rental costs may be "aggressive" in the current market, Upshaw expects them to stabilize and rise given The World's one-of-a-kind status.

At least two other ships have made overtures to challenge The World's dominance.

Arizona businessman Randall B. Jackson is developing a ship called The Magellan. While launch details have yet to be announced, the boat is expected to have 200 units that start at $2.3 million and go as high as $8 million.

Four Seasons Hotels and Resorts has also considered a shift from its land-based holdings to a floating community. The company has partnered with Miami-based shipbuilder Ocean Development Group on the project. Initial plans called for a 13-deck vessel with some of its 112 residences priced as high as $15 million.

Kristian Stensby, Ocean Development Group's founder, says an announcement will be made in the fall.

Oceanic Retirement Communities of America of Cape Canaveral, Fla., recently started taking reservations for a program that will allow seniors to buy condos on a private ship that will provide the assisted-living services found in land-based facilities. The ship is expected to launch within a year.

Upshaw says ResidenSea welcomes any competition.

"There are some fabulous things about being a category of one and we'll always be the one that pioneered it," she says. "But competition is good and it would probably elevate the awareness level."

-- Reported by Joe Mont in Boston.

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