The condo yacht, a house that makes waves
Anyone buying an apartment aboard Somnio, the newest residential cruise ship, should note an innate constraint: Don’t expect owning a home in this gated oceanfront community to instantly confer non-status. dom. “You cannot declare residency on Somnio – believe me, we have tried several times, but there is no way for it,” says Erik Bredhe, co-founder of the ship.
Navigating a luxury apartment full-time might not lower taxes, but Bredhe promises that such an investment has other benefits. Above all, it’s the appeal of being part of an exclusive club – there are only 39 apartments on board. “It’s about the community of like-minded people. Everything comes so easily, ”he says. “The crew are there all the time to steer the ship for you.”
For such a rarefied company, however, certain aspects of Somnio seem strangely egalitarian: the annual itinerary is decided in consultation with the residents.
For a long time, the idea of a residential cruise was synonymous with a single ship: the World, the only one of its type to sail since its launch in March 2002. But if the start-up of Bredhe, and a host of other competitors, arrive dock, the richest in the world will no longer limit themselves to The World.
Blue World Voyages, co-founded by Fredy Dellis, serial cruise entrepreneur, will have state rooms for one-off events, as well as apartments occupied by their owners. Njord has an arsenal of water toys, including submarines, which is aimed at the more adventurous shopper. Another new entrant, Storylines, intends to capture the affordable market: Its website lists homes on the high seas starting at around $ 700,000, cheaper than the millions charged by others.
It’s not just the price that sets Storylines apart, but its leadership team. The other companies are run by alumni of The World: Somnio’s Bredhe was its captain, Dellis was the managing director and Alain Gruber, who runs Njord, was in charge of operations. All are trying to learn valuable lessons from the bumpy ride of the secret luxury liner.
The launch of the World was plagued by difficulties, but a group of the ship’s inhabitants gathered to save it from the shores, relaunching the project under their own leadership.
Bredhe says The World was too big and many owners were away much of the year as a result. “Because there was hardly anyone on board on the Pacific crossings or the transatlantics, it was called the ghost ship, or the dead ship.” Somnio has about a quarter of the number of apartments on The World.
Another problem was the seniority mix. Initially, The World offered both owner’s cabins and state cabins that could be hired for one-off trips, much like a commercial cruise liner. The needs and behaviors of the two groups clashed: longtime residents wanted to navigate slowly, idling overnight in ports, while occasional travelers wanted to roam fast and far. The drastically different size of the accommodations was also a source of friction, as the larger cabin is 10 times the size of the smaller one.
“What’s going on with small apartments like that?” You almost get like a first and a second class on board, ”explains Bredhe. When it was revived as owner, The World became residents only.
Bredhe is convinced he can avoid the financial woes that haunt The World as well, with a group of investors providing the roughly € 500 million Somnio will cost to build. Bredhe refuses to share sales details, but says the ship has already sold apartments and is financially secure enough to meet its slated third quarter 2024 launch date. Prices start at € 9.5 million (approximately $ 11 million).
Somnio will also not work with a real estate agency for sales. “We tried to work like that on The World, but it wasn’t that successful,” he says, noting that word of mouth is better to trust.
The Njord Gruber is also bullish in The World’s wake. “I have enormous respect for this ship, but sometimes it’s better to be second in the market,” he says. Like Somnio, the project is funded until completion, says Gruber, through a combination of progress payments from buyers and institutional funding in Germany, where construction will begin early next year.
“Buying on Njord is buying in the ultimate exclusive community,” says Gruber. The ongoing maintenance fees that each owner pays, he says, are like privileged country club dues. Njord’s toy line is likely to help attract young full-time cruisers. “He can go to iconic cities and yachting spots around the world, but we can also take him to parts of Antarctica that no one has seen, or the Northwest Passage.”
But the history of this industry suggests that ocean roaming developers face significant hurdles. The world’s rivals have already been announced. Utopia, a 190-unit vessel first mentioned in 2009, with sales starting four years later, still does not have a firm launch date. Commercial operator Crystal Cruises is a subsidiary of Genting Hong Kong, a cruise and resort conglomerate that lost more than $ 1.7 billion in the last fiscal year. Crystal had announced that she would sell state rooms as residences on several of her upcoming ships in May 2016, but in February 2018, she canceled the apartment program.
Allan Jordan is a maritime historian specializing in cruise ships. “Financing for the buyer is the whole problem because you’re not selling a real asset like a property. At some point, The World will need to be removed as the ship wears out. If you buy a condo, it may need maintenance, but it’s there forever, ”he says. Many residential ships therefore offer their properties as effective leases and prioritize cash buyers as securing mortgages can be difficult.
It should be noted that apartments on The World have not appreciated in value, unlike conventional real estate: at launch, prices started at £ 1.5million, or around $ 2.17million at 2002 exchange rate. Today they start at $ 2 million.
Jordan says the increase in the number of residential cruise ships right now is in part a side effect of the pandemic’s impact on commercial cruises. Most cruise lines have had financial difficulties. The Centers for Disease Control and Prevention (CDC) issued a no-navigation order for much of 2020, putting the industry on the back burner. Cruise lines headquartered abroad have been excluded from much of the financial support offered by the US government.
To this was added an image problem created after the emergence of the first two Covid-19 hotspots on cruise ships, the Grand Princess and the Diamond Princess, forming an unfortunate association between the pandemic and this industry. Shipyards felt the effect when orders for new ships were canceled or simply did not arrive.
Jordan says it’s no surprise that a large cruise ship builder like Germany’s Meyer Werft – where Njord is about to be built – would be more willing to work with one of these start-ups. ups on such a ship now than before. decade, when its order books were oversubscribed.
No one understands how difficult it is to launch such a ship better than David Nelson. The Minnesota-based developer has been defending its own residential cruise ship for nearly 15 years. It was just before the 2008 financial crisis that he secured funding for his River Cities project, a residential vessel that would ply American rivers and was designed as a floating retirement community.
“We’ll always be in sight of an interesting land, city or place where you can get ashore almost every night,” he says. “Being on the ocean water can get a bit boring.” It might appeal to a larger market than The World’s super rich buyers.
In the aftermath of the financial crisis, Nelson managed to sell a few units and even built a model ship that included a two-bedroom 3D condo. He and his team sailed this miniature version of the cruise ship for a few years on marketing trips, scoring a few engagements as they went along. Eventually, however, the financial hurdles proved insurmountable: even at lower prices, cash-only transactions are difficult to secure.
“Mine was a real estate investor’s idea and it was hard to find someone interesting when there were so many opportunities to buy. [traditional homes] low and sell high. All the investors went there. Nelson admitted defeat and sold the sample ship.
He did not lose hope, however. Next week, he hopes to sign a deal with a new funder who will fund the marketing of the program: If sales pick up and cash flow improves, he prepares the design for construction in Morgan City, on the banks of the River. Atchafalaya River in Louisiana. .
“Over the years people have looked at the idea and wondered why it had become obsolete. But that’s not the idea, ”he says, still optimistic,“ It just seemed like we were a little roughed up at first. “
Properties for sale: condominium yachts
Cut 644 feet, 12 decks; 165 units
To throw May 2002
Price $ 2 to $ 15 million, plus annual fees
Ownership structure Now owned by its residents, more like a cooperative than a condominium, a self-regulated community at sea
Cut 222m, 6 bridges; 39 units
To throw Q3, 2024
Price From 9.5 M €, plus monthly fees
Ownership structure No lease, but ownership for the life of the yacht. Maintenance costs per square foot
Cut 289m, with 13 bridges; 117 units
To throw 2025
Price From 8 M €
Ownership structure A 50-year lease with 5 percent of the purchase price taken as a monthly maintenance fee
Cut 600 feet, 5 decks, 4 hulls; 180 units
To throw Be confirmed
Price Starting at $ 161,000 for six months per year on board, plus monthly maintenance fees
Ownership structure The apartments are sold on a renewable 100-year lease