The ocean goes condo

THE story has it that Knut U. Kloster Jr., former chairman of Royal Viking Line and Norwegian Cruise Lines, got the idea for the world’s first residential cruise ship when he noticed travelers staying on his conventional cruises for extended periods. One thing led to another, and $325 million later, Kloster had birthed a new wave of real estate: condos at sea.

That was in March 2002. Since then, Kloster’s 644-foot ship, the World, has had the residential seas to itself.

Until now. Three other companies are jumping into the home-at-sea waters. With units for sale from about $1.3 million to $15 million, life aboard is tantamount to that on a luxurious private yacht, shared with like-minded compatriots as you circumnavigate the globe. It’s the stuff of daydreams -- even for Dramamine aficionados.

The race for real estate dominance at sea is not about who finishes first -- the World is already operational -- but about who can be the most exclusive. Dueling with 1,020-thread-count Egyptian cotton linens, fine china and high-end stainless steel appliances (and salespeople who can’t seem to complete a sentence without using the word “exclusive”), all four ships are mining the same market: the very rich.

On the day you hit the lottery, here are some options to consider:

* The World: This ship takes its time. It circumnavigates the globe on a two-year itinerary that allows residents and their guests to linger in each port.

“What we are selling goes beyond a vacation home,” said Nikki Upshaw, senior vice president of sales and marketing for the World. “We are selling the ability to relax, carefree.”

While most World residences come with a gourmet kitchen, few apparently get used. Residents dropping anchor in say, Sydney, Australia, would much prefer to try the city’s latest hot restaurant, Upshaw said. Residents use the World as a high-end boutique hotel while they busy themselves onshore.

There may be some conventional cruising mentality onboard with a few guest lecturers speaking about the port of call, but for the most part, residents are into discovery on their own.

* The Orphalese: Named after the mythical city in Kahlil Gibran’s “The Prophet,” the Orphalese will have an itinerary that is event-driven instead of destination-driven. When completed in 2008, the ship will circle the globe in search of the party du jour -- the Cannes Film Festival in France, the Monaco Grand Prix in Monte Carlo, Carnival in Rio, Chinese New Year in Shanghai, America’s Cup in Spain, the Olympics.

The ship will also have an 80,000-square-foot mall that should give Rodeo Drive a case of envy.

* The Magellan: The ship’s bells and whistles include an observatory and a full-time astronomer. The Magellan will tote along its own marina, where owners can dock their personal vessels. Getting ashore will be made easier by the two Bell jet-helicopters, and the ship has an on-deck all-weather heliport.

The attention to detail in the residences will include such features as custom wood cabinetry, stone kitchen counters, walk-in closets, built-in hutches and writing desks with high-speed Internet access.

* The Four Seasons: And finally, the Four Seasons hotel chain is entering the waters in 2008 with a slight twist: a floating residential fractional- or whole-ownership resort. Ever mindful of the sensibilities of its guests, the Four Seasons is planning two luxurious water taxis that will be capable of docking among the pretty yachts instead of in the section of the port with the unsightly cargo ships.

What it will cost you

None of this comes cheap, as you might expect.

The eight units still available on the World are priced from $1.3 million for a 630-square-foot studio to $6.3 million for a 3,200-square-foot three-bedroom apartment. Annual maintenance fees -- think homeowners association -- are based on the square footage of the unit and cost $80,000 to $450,000. But there are no property taxes, and housekeeping comes daily.

The Orphalese, which opened a Las Vegas sales office in October to market its units, is charging $1.8 million for 1,000 square feet to $10 million for a 3,900-square-foot unit. Homeowners’ fees are based on unit size and cost $30,000 to $78,000 a year.

The Magellan is selling its first phase of pre-construction units for $1.9 million to $6 million. When 120 residences -- 60% -- are sold, construction will begin. And after every 25 units sell, the price of the remaining ones will increase by $100,000. Annual “ship operating expense” fees are based on unit size and will cost $96,000 to $240,000.

The Magellan announced recently that it too would offer fractional ownerships of one-month increments, starting at $156,250 for a one-month ownership in a two-bedroom unit.

And over at the Four Seasons, dig into your wallet to the tune of $2.5 million to $15 million for whole-ownership units. Annual maintenance fees are 10% of the purchase price. Fractional ownerships start at about $400,000 for a 28-day share.

Financing is available on all four ships. And although there are no property taxes to deduct on federal income tax filings because the ships are registered under non-U.S. flags, mortgage interest can be deducted for those who file taxes in the United States. Some who buy units use them for business entertainment, another tax break.

An exclusive clientele

Who is buying? Forty percent of the World’s buyers come from North America, 40% from Europe and 20% from elsewhere, with a strong representation from South Africa and Australia. The median age is 52. Buyers are overwhelmingly self-made entrepreneurs as opposed to having inherited wealth.

Who they are, well, that’s a secret. Buyers enjoy a level of identity protection that rivals the FBI’s witness relocation program.

The ship’s residents, said the World’s Upshaw, made a covenant not to grant media interviews. Management discourages ownership by high-visibility celebrities, and marketing approaches are more along the lines of a discreet tap on the shoulder from a top international realty broker than a phone call interrupting dinner.

Lee Minshull, who apparently doesn’t fear being voted off the ship by his fellow homeowners, just bought the first unit on the Magellan and was happy to speak about it.

A dealer in rare antiquities who lives in Palos Verdes Estates, Minshull is about to close escrow on a $3.2-million, three-bedroom suite on the Magellan. His Palos Verdes Estates house is 6,000 square feet, and he owns a second home in Hawaii.

Minshull, who is in his mid-40s, learned of condos at sea through his membership in Exclusive Resorts, a high-end vacation club with 1,700 members. He paid $400,000 to join, and the annual fees are $25,000.

“I like traveling with people of similar means,” Minshull said. “Yeah, I know how that sounds. But it’s true.”

He tested out life at sea with a few World cruises. Who were his fellow travelers? One was an Arabian prince who lives in Monaco. “A very nice guy,” Minshull said.

Minshull thinks of his Magellan unit more as a lifestyle investment, rather than a real estate investment. “It’s a depreciating asset,” he said. “Ships have a lifespan, after all.”

However, units aboard the Magellan are owned via a 100-year leasehold from the Magellan Ship Owners Assn. The group’s literature says “the Magellan is expected to remain in operational condition for the 100-year life of the vessel,” thanks to a rigorous maintenance schedule.

Entrepreneurs are expected to trump heirs on the Four Seasons as well. Four Seasons buyers -- 34 of the 96 units (86 whole ownership and 10 fractional) have been sold -- include a potato farmer from Idaho, a foreign exchange trader from Chicago, a gaggle of New York financiers and a Palm Beach heiress.

Leif-Eric Hvide, senior vice president for sales and marketing of the Four Seasons ship, said most buyers plan to use their units only for vacations, although one California couple are “cashing out” -- selling their home and planning to live at sea.

For those just waiting to win the lottery, units on the World can be rented for a week or more for $1,500 to $5,000 a night, depending on size and season. Gratuities are included, should that factor into your decision to book.

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Living the high life year-round on the high seas

Condo-at-sea ownership has its privileges -- at a price.

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Ship: The World

Number of units: 165

Price: $1.3 million to $6.3 million

Living space: 630 to 3,200 square feet

The hook: Top deck, full-shot driving ranges. Think boutique hotel that lingers in port.

For more information: (800) 970-6601; www.residensea.com

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Ship: The Magellan

Number of units: 200, including 16 penthouses; some fractional ownerships

Price: $1,875,000 to $6 million

Living space: 1,130 to 3,147 square feet

Features: Two helicopters and a heliport, a floating marina and an observatory

The hook: A leisurely jaunt around the world will take two years and make 150 stops

For more information: (480) 497-8833; www.residentialcruiseline.com

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Ship: The Orphalese

Number of units: 200 plus 265 suites without kitchens

Price: $1.8 million to $10 million

Living space: 1,000 to 3,900 square feet

Features: An 80,000-square-foot shopping mall

The hook: Stops at the world’s most renowned events

For more information: (800) 455-4328; www.theorphalese.com

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Ship: Four Seasons

Number of units: 96 (86 whole ownership, 10 fractional)

Price: $2.5 million to $15 million for whole ownerships

Living space: 797 to 4,000 square feet

Features: Four Seasons luxury and service

The hook: Winter in South America and Asia; summer in Europe, Alaska

For more information: (305) 438-7447; www.oceanresidences.com

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Sources: ResidenSea, Residential Cruise Line, Orphalese Global Strategies Inc., Ocean Development Corp.