Could real estate development be the killer app for space?
An "Airbnb in space" enabled by Starship could generate $480MM a year in profits.
Kasper Kubica wrote an interesting article, “The $10MM Condo in Orbit.” Naturally the research staff at Curious Cosmonaut headquarters were intrigued. The piece is well-researched, pragmatic, and definitely worth a read. But it begs the question: if condos in space become a thing ten years from now, could their owners rent them out and make money? In other words, could the “killer app” for becoming spacefaring be something as old and pedestrian as real estate development?
Spoiler alert: the answer is yes! Here’s the rough math:
Expenses:
Buy condo in space for $10MM.
At 6% for 20 years, your annual mortgage payment is $864,000.
Assume your annual maintenance fee is 20% of your mortgage at $173,000.
So total annual cost of ownership is $1,037,000. Let’s round up to $1.1MM.
If you charge $45,000 per week, that’s over $2.3MM in revenue and you’re netting $1.2MM every year. Kubica’s theoretical space condo development would have 400 units. Such a facility would generate $480MM in profit.
A Starship-enabled space condo development could generate $480MM / year in profits.
Not bad. But how big is the market? That is, how many people would pay $45,000 for a week in space? And let’s not forget that the rental price doesn’t include the price of travel as well. Let’s put ourselves in the shoes of our astro-Airbnbers and calculate the total cost of a week in our space condo:
Starship ticket price: $20,000 (assumes 500 passengers generating $8MM in profit for SpaceX with every launch)1. If you take a friend, that costs you $40,000.
Plus $45,000 for the week.
Plus, say, another $15,000 in food, fun, and frolicking while you’re in the space condo resort.
That’s a nice round number of $100,000 for an unforgettable week in no-kidding space for you and your lucky friend. So the true cost for a week in space is not $45,000, but really closer to $100,000.
Furthermore, Kubica’s space station has roughly 400 units. So to maximize profits for the entire space resort, the developer would need to sell 20,800 ‘unit weeks’ every year (400 units times 52 weeks per year). Would 21,000 people pay $100,000 for a week in space?
How many people will pay $100,000 for a week in space?
The honest answer is that we don’t really know. Current space tourism comparables are not really relevant. Jared Isaacman just paid $200MM for less than a week in space but that was in a cramped capsule. Kubica’s space condo is huge, with trees and fields and a small lake. Virgin Galactic has sold hundreds of tickets to suborbital space at $250,000 a pop but, again, a ten minute jaunt in a tiny spaceplane is not really comparable to what is being proposed here.
If we look further abroad we see that over 26,000 Tesla Model X’s were sold in the U.S. in 2020 alone, and they start at $80,000. Furthermore, chartering a luxury yacht for a week can easily cost $100,000 and, despite the cost, is becoming more and more popular. Indeed, the global yacht charter market exceeded $6.5 billion in 2019. Might space condos become the new way for the ultra-rich to impress their friends at cocktail parties?
The new flex: “You chartered a luxury yacht? How quaint. I just went for a holiday in space.”
All this back-of-the-envelope math is fun but what it really means is that Starship is about to unleash a tidal wave of possibilities when it comes to life in space. If it is half as successful as SpaceX intends it to be then humanity could be very, very close to becoming spacefaring. And maybe even kicking off a real estate industry in orbit.
What do you think? Is this nuts? Maybe you found a math error? Or you think this is the best thing ever? Whatever the case, let us know! Tweet us @CuriousCosm0. Join the email list. And share this article.
Musk has said he thinks Starship launch costs could get as low as $2MM per launch. https://www.scientificamerican.com/article/spacexs-starship-could-rocket-boost-research-in-space/