New Real Estate Trend: The Condo Cruise
With demand for prime Florida real estate continuing to grow, and land in short supply, Pensacola native Mark Boyd had an idea. Start selling condos on the water – literally.
“With nearly eighty million baby boomers starting to retire this year, and a large number of them wanting to live where it’s warm, someone needed to come up with a solution, so I thought of assembling a group of investors to purchase a cruise ship and convert the cabins to condominiums,” said Boyd, a consultant to multiple Gulf Coast real estate developers.
He developed a formula to account for the typical $15 million it takes to operate a mid-size luxury cruise ship annually. As a result, condo owners will only pay a condo association fee of between $7,000-10,000 a year for a suite costing from $349,000 to $529,000. Nothing more. While he will not reveal the exact calculations, Boyd says a portion of the fee is derived from the ongoing casino and nightclub operations on the ship.
More than 10 million people worldwide take cruises each year and 80 percent of them are Americans. The cruises are so popular that they cannot meet demand — many leave port at 104 percent occupancy, and are booked at least six months in advance. Ships get bigger to address the huge shortage in cabins, and as cruise lines add larger ships, they retire smaller ones.
“Many of these ships still have 20 or 30 years of life left in them and can accommodate several hundred passengers in great comfort,” Boyd said. “We will take a retired cruise ship and convert every two to three cabins into luxury suites and sell them to investors.”
Luxury cruise ships sport first-class amenities and have more personal service than standard vessels. They cater to the wealthy and cost between $400 to $1000 per person, per day, according to Cruise Lines International Association (CLIA), the industry’s leading trade organization.
“That’s $5,600 to $14,000 per week. Our condo suites will rent from $3,000 a week for our basic single-suite, to $6,000 a week for our largest three-room penthouse suite, thus making luxury cruising a little more affordable, while at the same time providing tremendous returns on our condo owners’ investments,” said Thomas Blackburn, Boyd’s partner and Executive Vice President.
The Florida home loan market may experience a lull this year, but some experts feel the best is yet to come. The industry is not dependent on the baby boomers, with more than 700,000 more millionaires in America this year than at the this time a year ago. Florida real estate investments are a staple in portfolios these days, with that trend not expected to end any time soon. The cruise and real estate industries are is grounded in common truths:
- Americans love to travel.
- Americans love to make money.
Condo Cruise Lines’ first ship is already being reserved by prospective condo purchasers in the same manner a traditional Florida condo development sells its units during the pre-construction stage. The process requires the purchaser to provide a $10,000 deposit which is refundable with interest for any reason by either the purchaser or the organization.
With no ongoing electric bill, water/sewer bill, cable bill, or even groceries, and health spas, daily housekeeping, shopping, restaurants, lounges, a casino and an ever-changing view in your “building,” it’s easy to see the benefits of such an investment. Not only that, but in the event of a dangerous storm, the ship simply moves. Another benefit for pre-construction Florida condo investors is that the development is already built and the units are, for the most part, priced below your average real estate condos.
“All-in-all I think we have developed a whole new parallel real estate market,” says Boyd. “We want to augment what the investment real estate industry is already doing … and add a little fun to it at the same time.”
Well, it certainly seems that some creative investors predict smooth sailing (sorry) for the Florida real estate market as we enter 2006. And that, despite a market that is very much in flux, there are many ways for people on both ends of the spectrum to remain afloat (sorry again).
