London & New York: Where Rich Buy Their Trophy Homes

World's richest people always make news when they invest in real estate. While their riches are measured by opulent homes that they own, a city's riches are measured by the number of super luxurious homes it boasts of.

Two such cities, London and New York, are top rankers when it comes to world's most expensive homes.

Interestingly, luxury homes in these two cities are even auctioned by Sotheby's and Christies, the world-renowned auctioneering biggies, under their realty divisions.

The $100-mn homes

New York has been the destination of choice for the rich, when planning to invest $100 million or more. Earlier this year, a condo worth $100.5 million was sold in New York's high-rise Billionaires Row.

The boroughs in New York that is home to some of the richest people in the world include Upper East Side of Manhattan overlooking the Central Park, and Brooklyn.

River House in Manhattan is home to some of the renowned names in US politicians, authors, and actors. (Wikimedia)

On the other hand, after a year-long lull in sales of luxury homes in London, the real estate market here took off, after the Conservative Party came to power during nation-wide elections, earlier this year. The Labour Party had proposed a mansion tax on properties worth £2 million, which put the potential investors off.

The city enjoys love for the homes here from crème de la crème of the world, especially the multi-billionaires in Middle East. The expensive London boroughs includes Belgravia, Mayfair, Chiswick, and Knightsbridge, among others.

Knightsbridge: Taken at the junction of Brompton Road, and looking towards Hyde Park Centre. (Geograph.org.uk)

Homes here are considered to be the trophy homes of rich.

Wait longer for return on investment

Though the sales in these two cities are picking up, that has not been the case with the return on investment. The reasons include slow re-sale value coupled with growth in the real estate markets here, which has given rise to a glut, especially in Manhattan. The sales of luxury condos here dropped heavily since the financial crisis in 2008, while the number the demand for high-rise apartments started rising after 2007, due to global investments. These apartments, which are more than 2,000 sq ft in size, were created for a specific segment of buyers (investors). Even though the segment's ability and zeal to invest has gone down, these apartments remain.

While on the other hand, London witnessed no glut. Sales in areas like St John's Wood have dropped, but the demand in Central London is growing. The demand is coming from the ultra high-networth individuals (HNI) scouting for penthouses and townhouses. This demand spurt came in after the threat of a possible mansion tax being levied, was cleared after the elections.

The right time to invest is now

Slowing demand and growing surplus in Manhattan, has not yet had an impact on the prices of luxury condos, making them stagnant. This makes Manhattan a better market, when compared to London, to invest in properties priced $100 million or more.

But, real estate experts suggest, now after the elections, the London luxury residential real estate market might see growth in prices.