[From the desk of Gunner: For today's Sleuth, we once again turn to our friend Jonathan Kolber, a leading technology analyst and entrepreneur.

Jonathan is always tuned in to the latest technology -- the stuff that seems like science fiction now but will end up playing a major role in your life and the lives of your children in the years to come. Jonathan can also help prevent those pesky "If only I had known..." conversations you might have had regarding cell phones or the Internet...

So what do underwater hotels, alternative energy and upending the real estate market have in common? Just ask Jonathan...]

Would you like to stay in an underwater hotel? Soon — if you’re wealthy enough — you may have that option.

In Dubai, the world’s first luxury underwater hotel is being built. It will house 220 subterranean suites.

Joachim Hauser, the developer and designer, is about to begin construction. It will be built approximately 60 feet below the surface of the Arabian Gulf and is scheduled to open by 2008. The project has attracted funding commitments of $550 million.

The crown prince of Dubai contributed the land. More importantly, he is also an active participant in the construction, having helped form several companies for this purpose. A total of 150 firms are reportedly involved.

The Dubai Development & Investment Authority (DDIA) set up all the appropriate financial structures. Structural analysis was performed, and construction began in summer 2005.

Hauser sounds more like a missionary than a traditional hotelier, with remarks like, “You can’t help being fascinated [by the sea] and you start caring about all the associated issues. Humans consist of 80% water, the Earth consists of 80% water; without water, there is no life.”

He continues, “We want to create the first-ever faculty for marine architecture because I believe that the future lies in the sea, including the future of city planning. I am certain that one day a whole city will be built in the sea. Our aim is to lay the first mosaic by colonizing the sea.”

The planned structure resembles something out of a science fiction movie.

The planned hotel will have all of the natural elements one associates with a five-star aboveground facility. This will include ballrooms, meeting rooms, fine restaurants, exercise facilities, spas and the like.

In addition, it will have some elements not commonly associated with hotels. For example, the aboveground ballroom will have a retractable roof allowing for open-air events in Dubai’s pleasant climate. There will be an on-site marine research facility.

A unique kind of train will raise and lower people from the land station into the underwater hotel facilities.

Underwater Hotels: A Future Chain of Aquatic Hotels

In addition to functioning as a hotel, Hydropolis is being packaged as a tourist attraction. Apart from the hotel guests, 3,000 tourists per day are expected. They will be treated to tours of the facility, as well as special films highlighting the evolution of marine life and amazing features of the ocean. Hauser says, “The aim is to inspire people to develop a new awareness of the sea.”

From an investment standpoint, where is this leading us? Assuming the hotel is able to sustain a high rate of bookings at super-premium prices, I foresee a number of implications.

First, other such underwater projects are sure to follow. At first, these will be hotels.

Indeed, Hauser’s Crescent Hydropolis company intends to build a chain of underwater hotels. He claims that nine countries are interested.

Once hotels are running profitably and without hitches, they will be followed by condominium projects.

All of those initial projects will be close to shore, with the easy access to the support infrastructure that hotels typically rely upon. Eventually, however, I would expect a visionary cruise line operator to take that proven business model and build a structure further out in the ocean that’s partially above and below water.

It would be a kind of hybrid island/hotel. Very likely, some of the support staff would live in homes on the artificial island. (I happen to know of an orphaned technology package that could make all of this very feasible. Hauser may know the same thing, because he says, “My initial proposal was a deep-sea project, which looked very different.”)

Hauser’s comments suggest that he is also aware of how ocean thermal energy conversion technology (OTEC) could make such a hotel or community self-sustaining. OTEC relies on the temperature difference between surface ocean water and deeper water to generate electricity. It requires no fossil fuels.

The cruise line would use its vessels to bring both passengers and supplies to this unique vacation facility on a regular basis.

Where might such a facility be located?

My guess is some location offering absolutely amazing underwater sights and experiences. There are many candidates, ranging from “lost cities” located off the coasts of Cuba, India and possibly Japan to the incredible coral reefs of Australia. 

Underwater Hotels: A New Venture into an Old Investment

Here’s an example: For a year, I lived on the island of Koh Samui, in Thailand. Next door was a small, little-known island famous among the world’s scuba diving community. The reason? Divers reportedly can see clearly for 100 meters.

Not being a fan of scuba diving, I never shared the experience. But I would gladly pay a premium price for a hotel room that gave me that same view. So would many others.

There’s an old saw, “Buy real estate — they’re not making any more of it.” Here’s a first, tentative foray into changing that proposition. Another time, I’ll write about several emerging technologies that will completely upend the real estate market in the next decade or two.

These technologies will put the lie to that old saw once and for all, and investors visionary enough to back the companies behind them will make fortunes.

To your profitable future,

Jonathan Kolber
February 1, 2006

Underwater Hotels: And Now, Hydropolis was originally featured in the Penny Sleuth.