World's priciest home a true modern palace

By Sara Clemence

updated 2:02 p.m. ET July 26, 2006

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 centers 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.

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."

Most expensive by continent Click for more coverage Most expensive homes in North America Most expensive homes in Africa Most expensive homes in South America Most expensive homes in Europe Most expensive homes in Asia Most expensive homes in Australia, Oceania

For our second annual look at the most expensive homes in the world, we compiled lists of the 10 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.

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.

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