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The world's most expensive homes

July 25, 2006 12:14 IST

In Hong Kong, they gaze over the glittering city from the heights of the Peak. In Africa, they harbor elephants and lions. In Australia, they lie on the beach, of course.

The most expensive homes in the world may not seem to have much in common besides price--and even those vary greatly, from $100 million-plus palaces in England and the United States to grand houses priced under $10 million in South Africa.

But they do share common locations, in ghettos of wealth such as the Hamptons, the Côte d'Azur and Australia's Gold Coast, or business centres like New York and London. And the most luxurious residences in the most desirable locations share a shifting international pool of buyers, people who cross countries and oceans to get the homes they want.

According to the 2006 International Residential Review published by international real estate firm Knight Frank, the world's prime residential markets saw strong growth in 2005, and second-home buying was a major factor. The company predicts that this year, buyers from growing economies will increasingly look abroad for real estate.

"We saw it about five years ago begin with Russian buyers. The really seriously wealthy buyers came into London and increased prices at the high end," says Liam Bailey, head of residential research for Knight Frank.

"We expect to see the same process coming from China, Brazil, etc., as a new class of wealthy is created," he says. "America dominates in terms of number of millionaires, but you look at the potential of growth from places like India and China, it's absolutely vast."

Prices in the high-end segment of Hong Kong's market have doubled from 2003 to 2005, and there has been an increase in wealthy Chinese buyers from other parts of Asia, Knight Frank says. Strong economic growth in Dubai has increased the interest in buying foreign real estate, especially in London.

"There is lots of money going around the world these days," says Steve Laposa, director of the global real estate research group at PricewaterhouseCoopers.

Slideshows:
The World's Ten Most Expensive Homes
Most Expensive Homes In Asia
Africa's Most Expensive Homes

Increased transparency has made international real estate purchases less risky, he says. The internationalization of real estate services--agencies such as Knight Frank and RE/MAX work around the globe--has made more information available.

And buyers with means are seeing that their real estate investments are in many cases performing better than their bond or equity investments. "These investors are seeing that, you know what, residential has had great returns as far as increase in capital values," he says. "They say, I'll invest in Hawaii, invest in Macau, etc."

For our second annual look at the most expensive homes in the world, we compiled lists of the ten most expensive properties currently on the market on each of six continents. We scoured international real estate listings and spoke to top brokers around the world, restricting our list to homes and apartments, not including apartment buildings or plots of land, no matter how large or desirable. We allowed for some properties with a commercial aspect, such as ranches or vineyards, if they had prominent residences as well.

Slideshows:
Most Expensive Homes In Australia and Oceania
Most Expensive Homes In Europe
Most Expensive Homes In North America

Uncovering absolutely every top-priced home around the world is impossible. Some secretive owners will allow their homes to be shopped around only to preselected potential buyers. Others do not reveal asking prices. We include properties only if we are able to verify from the owner or broker that the property is currently up for sale, and that the price is correct.

Last year, we found only one property priced at $100 million or more. This year, that has grown to four--small numbers, but powerful when you're talking about such sums.

"What we noticed in the last two years is that the most rapidly appreciating property prices are at the top end of the market," Knight Frank's Bailey says. A main reason is simple supply and demand, he says. A wealthy buyer of a house in London wants to be in an area like Mayfair or Kensington, already mature neighborhoods.

"The number of properties doesn't grow, but demand can double or treble over a couple of years," he says. "These are discretionary purchases; these aren't necessary. If they want it, they will pay what it takes to get it."

The home once again at the top of our list is Updown Court, a spanking-new palace in England. The residence has what one might call strong curb appeal, with 103 rooms, five swimming pools and a heated marble driveway. What it doesn't have is an owner in residence, as it was built on speculation in the hopes that a very wealthy, probably foreign, buyer will covet it.

The same goes in Palm Beach, where Donald Trump has put a massive oceanfront mansion on the market. It's gorgeous and grand, with marble floors and a conservatory that overlooks the ocean. But it lacks chandeliers and other details, because nobody has lived there since Trump bought it two years ago and began refurbishing it for the potential new owner.

As impressive as these homes are, just as rarified are the neighbours. That holds true whether you are in England (the queen of England's home, Windsor Castle, is near Updown Court) or in a seemingly far-flung place like Marrakech, Morocco. A romantic Art Deco tower nestled in the middle of a lush, private oasis is on the market for $10 million, tying for fourth place on our Africa list. Buy it and you can borrow sugar from the Hermès family or renowned and reclusive designer Yves Saint Laurent.

New properties are constantly popping up around the world--two impressive newcomers are in Istanbul, one for $100 million. But you will also see the same ones on our list year after year. Despite the expansion of Forbes' billionaires list (we found 793 this year, compared with 140 two decades ago), the number of people in the world who have the means to purchase a $100 million spread is quite small.

And the subset of those who want a particular property with, say, views of the Bosphorus rather than the Atlantic Ocean, or done in the sleekest of contemporary styles rather than with gold leafing on the living room moldings, is even smaller. But fortunate, nonetheless.

Slideshow: Most Expensive Homes In South America

With reporting by Daniel Schuker and Cyrus Mossavar-Rahmani

Sara Clemence, Forbes