Jaws dropped when a triplex penthouse at the Pierre Hotel hit the market for $125 million, the highest-ever asking price for a New York City home. But believe it or not, that’s nothing compared to trophy home prices in cities like Monaco, London and Hong Kong, which are also setting new records for residential real estate.
The current record-holder for the world’s highest total sale price is billionaire Rinat Akhmetov’s 2011 purchase of a penthouse at London’s One Hyde Park condominium for a reported £136.6 million, or $219 million — approximately $8,774 per square foot. And a 35,500-square-foot penthouse at the under-construction Tour Odéon condominium in Monaco is now reportedly on the market for £250 million, roughly $391 million, or $11,000 per square foot.
“New York real estate today is still undervalued on the global stage,” said Stan Ponte, a Manhattan broker at Sotheby’s International Realty. “If you walk through properties in London and you hear the prices they’re getting on the simplest apartments, it’s shocking.”
Knight Frank, the London-based real estate consultancy and brokerage, recently ranked New York City at No. 8 on a list of the world’s most expensive cities. In New York, according to Knight Frank, $1 million buys approximately 474 square feet of luxury real estate. The tiny principality of Monaco, where $1 million buys only 172 square feet, was ranked No. 1, followed by Hong Kong, London, Geneva, Paris and Singapore (tied for fifth place), Moscow and, finally, New York.
These discounts are one reason deep-pocketed global investors — such as Russian billionaire Dmitry Rybolovlev, who famously purchased a 15 Central Park West penthouse for a New York City record of $88 million — have been so quick to snap up properties here, brokers said. And while industry observers said they initially expected international buyers’ feverish interest in Manhattan real estate to fade, economic turmoil in Europe over the past few years has prevented that from happening.
Yolande Barnes, director of residential research at the London-based real estate brokerage Savills, said she had anticipated interest in global real estate “would cool this year.” Instead, “the world economy continues to suffer setbacks,” she said. “People like real assets in those situations, and the U.S. looks like a very good value.”
And despite the ongoing inventory shortage here, New York actually has more housing available than some other cities around the world, said Andrew Hay, the global head of Knight Frank’s residential division. Construction costs and land prices are more affordable in New York than in some other in-demand cities, Hay explained.
“New York’s supply has been quite generous, whereas in other locations [the] amount of product is incredibly limited,” said Hay, who is based in London.
The famed resort destination of Monaco, for example, borders the Mediterranean Sea on a tiny strip of land about the size of Central Park. Not only is space for building in the principality limited by nature, but then-ruler Prince Rainier III banned construction of new high-rises in the 1980s.
Back in the U.S., the Pierre’s $125 million penthouse isn’t even the most expensive property in the country. Copper Beach Farm, a waterfront estate in Greenwich, Conn., hit the market in May for $190 million with David Ogilvy & Associates. The Owlwood estate in Los Angeles, which sits between Sunset Boulevard and the Los Angeles Country Club in Holmby Hills, is on the market for $150 million. And in Dallas, the Crespi Hicks estate was listed in January for $135 million by broker Douglas Newby of Douglas Newby and Associates.
Newby said the Crespi Hicks estate, which comes with a guesthouse and pool, is the largest residential property located in any U.S. city. The mansion is located in the exclusive Mayflower Estate area of Dallas, which is also home to former President George W. and Laura Bush, and Newby estimates that the land alone is worth some $50 million.
Yet Dallas real estate doesn’t have the same kind of international appeal as New York, he said, noting that most of the out-of-town potential buyers so far have hailed from California and other parts of the West Coast. And neither the 25-acre Crespi Hicks estate nor the 50-acre Copper Beach Farm are nearly as expensive as New York City when it comes to price per square foot.
European palaces
European cities boast some of the most expensive real estate in the world.
Take Monaco — home to the glamorous casino and resort destination of Monte Carlo — which has long attracted vacationing celebrities.
The royal ban on new construction there was lifted in 2008, and the first high-rise to be built since then — the under-construction Tour Odéon — may soon surpass One Hyde Park as the most expensive condo development in the world. The building, which will offer residents an in-house caterer and chauffeur, is being developed by Monaco-based Groupe Marzocco, designed by architect Alexandre Giraldi and marketed by Fred Schiff of Knight Frank. A spokesperson for the project said prices at the building start at $9,215 per square foot.
As for the $391 million penthouse: It has five floors and an infinity pool overlooking the Mediterranean Sea.
At London’s One Hyde Park, units for sale in the building are priced at an average of £7,000, or $11,240, per square foot, according to Knight Frank. When it hit the market in 2007, One Hyde Park “redefined the market in London and globally,” Hay said.
Developed by British developer Christian Candy and Waterknights — a company owned by the Prime Minister of Qatar — One Hyde Park is adjacent to, and managed by, the Mandarin Oriental Hotel, and offers a private squash court, spa facilities and valet services. The eponymous interior design firm Candy founded with his brother Nick is the project manager and interior designer.
A spokesperson for Candy & Candy said that there are three sponsor units still available at the property, where 82 apartments, worth some $2.9 billion, have been sold so far.
In London overall, the average price per square foot for a high-end residential condo is about £4,000, or $6,122, per square foot, Hay said. By contrast, the average price for the top 10 percent of all Manhattan apartments sold in the first quarter was $1,925 per square foot, according to a market report from New York City brokerage Douglas Elliman.
And the average price per square foot of closed sales at Manhattan über-condo 15 Central Park West was $5,009 as of mid-June, according to real estate data provider CityRealty. (At Extell Development’s hyped One57 in Midtown Manhattan, two penthouses are in contract for between $90 million and $100 million, a spokesperson said, but those units haven’t yet closed.)
Other superpricey London listings include a 50,000-square-foot mansion at 18 Carlton House Terrace, which is reportedly owned by a member of a Saudi Arabian royal family. The home, located near Buckingham Palace, is asking £250 million, or $7,675 per square foot. And last year, a 45-room mansion in Hyde Park reportedly hit the market for £300 million, or some $483 million. That 60,000-square-foot home belonged to the late Crown Prince Sultan bin Abdul-Aziz of Saudi Arabia.
London prices are so high due to a combination of factors, including its strict regulations for new building, England’s reputation for political stability and the city’s location between Asia and North America, which makes it attractive to wealthy Middle Eastern and Asian buyers looking for stable investments, according to Lulu Egerton of London-based brokerage Strutt and Parker, the U.K. affiliate of Christie’s International Real Estate.
“A lot of the Mideast and Far East regions, which have got huge bursts of wealth, they’re looking for wealth preservation and they’ve happened upon England,” she said.
“If you’re going to have a trophy asset — if you’re very rich — to add to your portfolio, owning a piece of London real estate is like gold,” she added.
Geneva, where $1 million buys just 344 square feet of property, is also one of the most expensive cities in the world, according to Knight Frank. Located high in the Alps and renowned for its ski resorts, the exclusive vacation spot measures only six square miles. In 2011, a home just outside of Geneva was listed for $12.2 billion, setting a new world record for most expensive residential real estate listing. Dubbed the “Gold House,” the home was supposedly decorated with some 440,000 pounds of solid gold and platinum. Owned by British designer Steven Hughes, it is no longer available for sale after many alleged that the listing was a fake.
In Paris, the sought-after French capital, $1 million fetches 409 square feet of space, according to Knight Frank. The 12-bedroom Palais Montmorency mansion on Avenue Foch hit the market in 2010 with an affiliate of Christie’s for a reported $140 million — at the time, the second-most expensive listing in the world. The 28,000-square-foot home, which still appears to be on the market, was built in 1912 and boasts a ceiling painted by French artist Henri Rousseau.
In Russia, real estate prices have skyrocketed since the real estate market was privatized in 1991, after the collapse of the Soviet Union. In Moscow today, there is not nearly enough luxury development to satisfy the country’s many billionaires. Many of the city’s high-end homes are concentrated in the coveted Golden Mile neighborhood, which has a number of new upscale residential developments alongside historic mansions.
This combination of strong demand and limited supply has driven prices up — $1 million buys only 463 square feet of real estate in Moscow, according to Knight Frank — as well as sending rich Russians in search of real estate in cities like New York.
Aeries in Asia
Asia is home to a number of fast-growing economies, which in turn has made several of its major cities very expensive places to live. Real estate prices in both Hong Kong and Singapore have doubled since 2005, Barnes said. And according to Knight Frank’s report, the number of billionaires in Asia is expected to grow by 119 percent by 2022.
In Hong Kong, space for housing development is constrained by a very small geographic area and a large amount of parkland. As a result, new development there is very expensive. For example, Hong Kong’s 39 Conduit Road is one of Asia’s most expensive condominiums, according to Knight Frank. The building has been making headlines since 2009, when a deal was made for a five-bedroom apartment there for $57 million, or $9,169 per square foot (a transaction that ultimately fell through). Asking prices for homes in the building now average £4,982, or $7,625, per square foot, according to Knight Frank.
The priciest sale on record in Hong Kong took place late last year, when a 6,683-square-foot apartment at the Frank Gehry–designed Opus Hong Kong condominium sold for $58.7 million.
Single-family homes are also very expensive in Hong Kong: An 8,597-square-foot, six-bedroom mansion at 5 Henderson Road is currently listed with Michelle Chung and Louis Wong of Christie’s International Real Estate for $90.2 million.
Another very expensive market is Singapore, where $1 million buys 409 square feet of space (the same amount as in Paris), according to Knight Frank. In April, an 85,000-square-foot mansion owned by real estate developer Cheng Wai Keung reportedly hit the market for S$300 million, or $242 million in U.S. dollars. The home, with a swimming pool and tennis court, is located in Singapore’s shopping district, next door to the Russian and Japanese embassies.
Catching up?
As more and more Manhattan listing prices hit the $90 million mark, New York real estate prices may be catching up to other major world cities.
New developments now coming on the market here, such as 432 Park and One57, are “testing the market by asking $6,000, $7,000, $8,000 a square foot” for penthouses and upper-level units, said Richard Steinberg, a broker at Manhattan-based Warburg Realty.
“[New York] developers are trying very hard to achieve the prices that London and Hong Kong are getting,” he said.
And when it comes to price per square foot, some super-high-end New York City properties are already selling at prices that rival or exceed those of pricey homes around the world. For example, Rybolovlev paid some $13,048 per square foot for his penthouse at 15 Central Park West.
“I hear the rumors of the Russians having it with London and moving onto New York,” Egerton said. “Maybe in the next five to 10 years we’ll find that they’ll prefer New York to London.”