Home Afloat

Under a sullen sky, Donna Blair, 54, dabbed tears and watched her $6.8 million vacation condo slip into the sea. Not that she was upset. "It's amazing," she said, a glass of champagne in her hand. "It's different from any of the other homes we own, that's for sure!" Donna and husband Jim, 56, had come from San Jose, Calif., to Landskrona, Sweden, to watch The World of ResidenSea, the world's first luxury condominium cruise ship, sail for Norway, where it would be painted and outfitted with a shipbuilder's equivalent of a Barguzin sable coat.

As an investment, the ship is somewhat akin to a $262 million, 12-decker mobile home: it starts to depreciate as soon as it's driven off the lot. But for residents, investing is not the point. "At no time do we discuss with them a return," says Fredy Dellis, the Belgian-born chief executive of ResidenSea. "What we're selling is a unique lifestyle." The World's maiden voyage is not until January 2002. But the drawing board is dazzling, with plans for onboard art exhibitions, a Swiss-run spa, a full-size tennis court and driving ranges, a retractable marina and a route that constantly circles the globe for events like the Cannes Film Festival and carnival in Rio. The 110 units range from 1,106 sq. ft. to 3,242 sq. ft., with a choice of four design concepts so posh that they were featured in October's Architectural Digest. The bigger condos sold best.

The Blairs are among 75 owners and 12 prospective buyers lined up for condos priced from $2 million to $6.8 million. In the bigger picture, though, they are part of a well-heeled, spending-friendly stratum of society that marketers circle like cats at a sushi bar, proffering exclusive riding clubs in the West or 400-year-old farmhouses in Italy. The minimum net worth for the World's condo buyers is $5 million, an elite group that marketers call "penta-millionaires." The niche might seem rarefied, but data issued in February by the Spectrem Group estimate that the U.S. has 531,000 such households, with an average net worth closer to $10 million.

Not all penta-millionaires are alike. The split is generally by age--of the people and of their wealth. The World's typical buyer is just over 55, with a self-made fortune and three residences. With plenty of cash and plenty more expected, they see little need to conserve wealth. Today's new money increasingly covets exotic experiences more than fancy trappings, according to Iconoculture, a research company hired by J.P. Morgan to track wealth culture in 12 cities. Larry Samuel, a partner in Iconoculture, thinks the World taps perfectly into today's moneyed mentality: "If bragging rights are defined more by what you do than what you own, what a coup it will be to tell somebody that this is how you live."

Yet the Blairs' motivations are vastly more complex than bragging rights. They have scuba dived in the Red Sea and sky dived in New Zealand. But they began to re-evaluate their future as they watched their parents' once zestful lives become circumscribed by age. Jim, whose father died last year, has partly retired from his thriving commercial-development company, and the couple wants to spend more time with friends and family, including three grandsons. Says Donna: "All of a sudden, we're the older generation. We began to ask how we wanted to spend the days we have left."

The World, in port 250 days a year, is really a town: population 650, half passengers, half crew. The town will have the condos plus 88 hotel-style suites (with built-in, bathtub-side ice buckets and glasses), a casino, nightclub, jeweler, state-of-the-art sewage treatment and its own laws (like no hanging laundry from the balcony). Residents can shop for food at a gourmet deli or dine in any of four restaurants--or have a chef prepare a private gourmet dinner at home.

This being real life, however, there is also a bill: annual condo fees are about 6% of the purchase price, which works out to more than $400,000 a year for top-priced units.

The creator of the World is Knut Kloster Jr., a cruise-industry veteran whose father founded what is now Norwegian Cruise Line. Kloster originally planned a ship with 286 condos and 183 hotel rooms. After scaling back, he was able to attract investors, including the Continental Casualty Co., a subsidiary of Chicago-based insurance giant CNA Financial Corp. But to persuade penta-millionaires to buy, ResidenSea assembled a cadre of credible associates, including its blue-chip investor Silversea Cruises, which will manage maritime and hotel operations. ResidenSea also marketed through sophisticated make-believe. Inside a factory near Vienna, the company built condo mock-ups so inviting that some residents bought art and rare books right from the displays. A promotional book brims with fantasy letters: "Venice, Aug. 18. Dear Melinda, What amazing sights I have seen."

Many of the World's buyers see their ship as a way to simplify luxurious lives. Richard Reed of Scottsdale, Ariz., who made his wealth from 300 karate schools and then founded a company that provides technology for health-club collection services, owned a 52-ft. yacht, the Narcissus, for 10 years. "I really fell in love with the sea," he says, "but I spent all this money, and I was out doing all this work while the guests sat around having a good time." He plans to combine work and play aboard ship, keeping up through the Internet, which, he says, "makes the whole thing work."