Posted by: John Vandivier | September 4, 2013

Seasteading Barrier to Entry Cost Analysis

In this article we will look at barrier to entry cost for seasteading.

Specifically, we will look at the cost for larger ocean vessels. I will not consider speed boats and smaller. We will begin with very large yachts and move up to cruisers. These will be vessels that people will be living on. We will look at both new and used vessels.

I looked at four major sources for buying and selling a variety of styles of new and used ships. Sources included Cruiseship Portal, Ships4ever.com, Yacht World and Apollo Duck. I also looked at the largest cruise ships according to this wikipedia article.

We are looking for the minimum cost/passenger. Larger ships will tend to be cheaper as will older models, but possible cheapening effects of new technology also need to be considered.

The newest cruise ships from the list of largest cruise ships began operating in 2013. There are 3 such ships and 1 with a cost/passenger ratio I could calculate. The ship, the MSC Preziosa, has a capacity of 3959 and cost $550 M USD, leading to a c/p ratio of $140,000 USD per person.

There are two cruise ships tied for the title of largest. Of the two, the cheaper to construct was the MS Allure of the Seas. Its $1.2 B USD cost and maximum capacity of 6296 give that ship a c/p ratio of $190,000 USD per person. That ship was ordered and paid for in 2006 and began operating in 2010.

Age offers a much more powerful pricing effect on ocean vessels. A 146 passanger vessel constructed in 1970 was listed for $275,000 USD, resulting in a c/p ratio of just under $1,900 USD per person, or 1% of the ratio of MS Allure of the Seas. Another cruiser, this one constructed in 1990, was listed for just under $600,000 USD and has accommodations for 180 passengers, resulting in a c/p ratio of just under $3,400 USD per person. Looking at the pictures, one can tell that there is a large quality difference between the 1990 and 1970 constructions. A few luxury cruise liners as new as 2007 were found with a c/p ratio less than $100,000 USD.

These ships may seem expensive on the surface, but keep in mind that they are to be used as homes. Consequently, the price should be compared to that of a house, not a typical sea vessel. According to the US Census Bureau, the median new home purchase, including land, was over $220,000 USD in 2010. The average, on the other hand, was over $270,000 USD.

In conclusion, buying a seastead could easily be more affordable than buying a new home. It turns out that this problem is not such a problem after all.

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