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An investment company linked to a little-known Russian fertilizer billionaire, Dmitry Rybolovlev, has agreed to pay $100 million to Donald Trump for a Palm Beach, Fla., mansion called Maison de l’Amitié.

The Trump Organization

Mr. Rybolovlev is paying $100 million for Donald Trump’s Palm Beach mansion, Maison de l’Amitie.

If the deal closes in the next few weeks, as planned, it is likely to be the most expensive sale of a U.S. single-family home. “This is the highest price ever paid for a house. And I think it’s a bargain,” said Mr. Trump.

The developer paid $41.4 million for the estate at a bankruptcy-court auction in 2004 and did a cosmetic renovation. Some brokers describe the house as a teardown, saying the property, among Palm Beach’s largest parcels, would be more valuable if subdivided.

The 33,000-square-foot French Regency-style mansion, built in 1990, sits on 6.5 acres with 475 feet on the ocean. Mr. Trump announced the home’s then-record $125 million asking price three years ago, then switched brokers in March and cut the price to $100 million.

Mr. Rybolovlev, born in 1966, is one of Russia’s richest and most discreet businessmen. Since 1996, he has been the chairman of JSC Uralkali, a major fertilizer maker. The Forbes list of the world’s billionaires places him at No. 59, with an estimated net worth of $12.8 billion.

“This acquisition is simply an investment in real estate by one of the companies in which I have an interest,” Mr. Rybolovlev said in a statement released by Alan Basiev, the head spokesman for Uralkali. It “does not represent a decision by me to live in the U.S.”

He said the company in the Trump deal is one of a number in which he has interests world-wide and that its managers had decided the deal “would be a good investment decision.” Mr. Rybolovlev received a degree in medical care from Perm Medical Institute in 1990.

Mr. Trump publicly confirmed the deal last month, saying the buyer was Russian but declining to name him. Lawrence Moens, a Palm Beach broker, had the listing. In 2007, investor Ron Baron paid $103 million for two adjacent vacant parcels in New York’s Hamptons.

Homeaway.com, which lists more than 115,000 vacation-home properties for rent, says the supply in popular destinations rose significantly during the prime February-through-April renting season over the same 2007 period. The number of properties was up 57% in Miami, 42% in California’s wine country, 32% in New York’s Hamptons and 31% on Cape Cod in Massachuestts, the Web site says. In a survey released last month, Zonder, another vacation-home rental site, found that 60% of a representative sample of companies that manage rental properties saw a significant percentage increase in inventory in the 12 months ending in April.

HomeAway.com

Tom Gleeson and Cyndi Gates upgraded this Carmel, Calif., cottage with a 50-inch plasma TV, surround sound and wireless Internet to attract renters.

Ray and Cathleen Shera are among the beach house owners who are trying to lure tenants. The couple bought a four-bedroom oceanfront home in Encinitas, Calif., for $3.55 million in March 2007. Initially, they thought they might hold it a while, then sell it. But the Southern California real estate market quickly turned sour, so they decided to rent it out instead.

To stand out from other beach places on the rental market, the couple says they spent more than $500,000 on upgrades and new furnishings, including Italian leather sofas, a new kitchen with a 50-bottle wine chiller and a Jacuzzi with iPod hookups. They also stocked the linen closet with Frette sheets and towels and the baths with scented salts and shampoo. “We wanted the same quality as a five-star hotel,” says Mrs. Shera, an interior designer.

Seven months ago, they started advertising the home for $40,000 a month in the high season. Their strategy worked — at least to the extent that they’ve been booked most of the time. But because of the tough economy more competitors are adding their vacation homes to the rental pool every day, making it harder to attract customers, even with all the amenities. The Sheras recently cut their rates by more than 20%, and say they’re just breaking even financially.

No matter how many extras the owners provide, some renters seem to want more, says Tom Gleeson, who manages the rental of a two-bedroom cottage in Carmel, Calif., for his significant other, owner Cyndi Gates. The couple, both real-estate brokers, outfitted the cottage with a 50-inch plasma TV, wireless Internet and a surround-sound system, as well as fine china, top-quality cookware and plump down duvets. But one renter who was allergic to down objected to the duvets, forcing them to buy a $500 synthetic replacement set. Despite their accommodation, she didn’t book another stay. Another guest, semiretired dance teacher Joe Weigandt, shunned the kitchen’s coffee maker when he rented the cottage in March and bought a $200 one that makes different flavors of coffee one cup at a time. Otherwise happy with the amenities, he left the coffee maker behind to use on later visits. “I don’t like to make a whole pot,” he says.

To some owners, all this pampering seems to be making renters a bit spoiled. Nancy and Ron Tinsley own the custom-built home in Waldport, Ore., that the Kuduras rented for $135 a night, as well as another house that they built next door. Besides the hot tub and upscale furnishings, they provide videos, toys and games for their renters’ children, and for the parents, body scrubs and lotions from the bath shop the Tinsleys own — as well as a complimentary bottle of wine from the Trader Joe’s grocery chain. But that didn’t satisfy one renter, whose only guest-book comment was a terse complaint dismissing the wine as “two-buck Chuck,” a nickname for the inexpensive Charles Shaw-brand wine sold at Trader Joe’s. “I couldn’t believe it,” says Mrs. Tinsley.

In April 2007, Russ and Lindsay Smith paid $4.2 million for an eight-bedroom oceanfront vacation home on Hilton Head, S.C., to use as a family getaway. To help pay the mortgage they started renting it out when they weren’t using it. The home already was well-equipped; it came with 10 televisions, two kitchens, a fireplace and a pool. But to attract affluent renters, the Smiths added original artwork, top-quality cookware, new carpets and high-end bedding and towels. Though the strategy seemed to help fill their booking calendar, renters often ask for lower rates, which range from $4,550 a week during the off-season to $13,550 for prime summer weeks. Except for the peak season, the Smiths will sometimes oblige. “Especially in this economy, people are trying to negotiate,” says Mrs. Smith — though some offers, for as much as 80% off the listed price, she terms “ridiculous.”

The Smiths also discovered that some renters can be sticky-fingered: Beach towels often go missing, and one renter made off with 10 of the 16 bathrobes, which cost $100 each. (The Smiths discovered the theft too late to recover the deposit money from the tenants.)

Tommie Rowland, a retired marketing executive, says most people are respectful of the fine china, crystal glassware and tropical designer furnishings in the three-bedroom condo she and her husband, Myron, rent out for $7,000 a month, and the two-bedroom unit that brings $4,500 a month, on Marco Island, Fla. But sometimes, guests like their furnishings a little too much. Recently, Mrs. Rowland discovered a $450 pillow trimmed in peacock-feather fringe was missing after a tenant left. She called, and the tenant apologized for taking it — but didn’t return it. The security deposit covered the cost, but Mrs. Rowland says the pillow was part of a one-of-a-kind custom set. “It can’t be replaced,” she says

In the world’s most expensive property markets, $1.5 million still doesn’t go very far despite some softening in real estate prices

How much house can you buy for $1.5 million? Depending on where you look, it might not be very much.

Despite global economic concerns, the credit squeeze, and rising commodity prices, properties in the world’s most expensive neighborhoods are still commanding ferocious premiums. While $1.5 million in Cleveland or Tampa would probably purchase a substantial house, with four bedrooms, a multicar garage, and maybe even such amenities as a swimming pool and media room, in London’s Belgravia or on Manhattan’s Fifth Avenue, it would buy you little more than a glorified shoebox.

Using data from London-based real estate group Knight Frank, BusinessWeek.com identified the 20 most expensive markets in the world and what you can buy in those cities’ prime areas with $1.5 million. In London, where at $6,191 the average price per square foot is the highest in the world, your $1.5 million would buy only a small studio in the smartest parts of town. In Venice, on the other hand, despite limited building space, your money goes a bit further, getting you a two-bedroom apartment or more near the Grand Canal. (Of course, in less illustrious neighborhoods, your money goes further still.)

Slower Growth, but Sustained Strength

And it looks as though, despite the general economic malaise, these top markets are likely to remain relatively strong for the foreseeable future, even if they won’t see the extraordinary growth of the past few years. Liam Bailey, head of residential research for Knight Frank, says prime markets had a relatively good year last year but are “on the tail end of a boom.”

For example, in the fourth quarter of 2007, prime real estate in once-booming Dublin fell 15% from the same period the year before, according to Knight Frank. Prices in other markets such as London and Tokyo continued to rise through 2007 but softened a bit this year. Luxury property prices in St. Petersburg at the end of last year were 38% higher than the year before, but that’s nothing compared with the 95% price growth in 2006.

London remains one of the world’s most robust markets, thanks in no small part to its position as the financial capital of Europe. Prices for prime real estate jumped 29% in 2007. But the city’s strongest price category has narrowed from £1 million ($1.98 million) and higher to more than £10 million, Bailey says. In other words, only the very top of the market is still seeing growth.

The sustained buoyancy of cities such as London and Paris and resort areas like Monaco or Gstaad is partly the result of their appeal to newly minted millionaires from Russia, China, India, the Gulf states, and elsewhere. Like wealthy Americans and Europeans, they don’t feel as affected by the changing economic conditions. In fact, many are actually helped by the downturn, especially in the U.S. where the dollar is trading at a discount to currencies such as the euro.

Confidence Issue

But even the most expensive markets aren’t immune. “You see price growth at the very best locations. If properties are perfectly positioned, if they have no faults, if they are perfect, you will see perfect price growth,” Bailey says. “Most markets are tailing off.”

David Michonski, CEO of Coldwell Banker Hunt Kennedy in Manhattan, says the softening of international real estate markets is a “normal correction in a major long-term bull market that started 10 years ago.” He adds: “I don’t believe it’s a function of the credit crisis. It’s a confidence issue at this point.… Everybody in the world has been told that wherever the real estate markets are, they’re going to fall.”

In Tokyo, prices began to soften soon after the subprime problems in the U.S. came to light, says Ryuichiro “Drew” Iwanami, director of global business development for Japan Sotheby’s International Realty. But Tokyo, which experienced a “mini-boom” from 2003 to early 2007, is also dealing with an oversupply of condos that were built in the low-interest-rate environment of the last few years, he says. The mini-boom followed Japan’s real estate collapse in the early 1990s, when prices for some rural properties fell to 10% of their peak price. “You’re beginning to see a slump in the sales of high-end condominiums…[and] the rate of price increases is stabilizing,” Iwanami says. “You may see more of that in the next 12 months.”

Still, the softening of real estate markets has at least one silver lining, especially in hard-hit cities such as Miami. Buyers from Canada, Europe, and South America are flocking to neighborhoods such as South Beach and Coral Gables, where home prices are tumbling. For Europeans, Miami’s declining condo prices are “like Americans handing them the gift of the century,” says Michonski. “The sun has not stopped shining. The beaches aren’t any less white, and the whole thing costs them 30% or 40% less.”

World’s Most Expensive Luxury Real Estate Markets

Take a look around the world at what $1.5 million buys in 20 of the world’s most expensive housing markets.

1. London
Price: $6,191 per sq. ft.
What you get for $1.5 million: Small studio apartment
Annual price change: 29%*

A housing boom began in Central London in September, 2005, and continued through 2007, as wealthy buyers flowed in from around the world. The annualized growth for prime real estate is slowing this year and is expected to weaken further. But the super-luxury segment remains incredibly strong. Sales for £10 million-plus homes in Belgravia, Chelsea, Knightsbridge, and Mayfair increased by 190% in the six months ending January, 2008, compared with the same period a year earlier.

* The annual price change compares the fourth quarter of 2007 with the fourth quarter of 2006.

2. Monaco
Price: $5,888 per sq. ft.
What you get for $1.5 million: Studio apartment
Annual price change: 25%

It’s not just the casinos, beautiful people, and staggering views of the Mediterranean that have made Monaco a popular home for the world’s wealthiest buyers. The real appeal is that its residents don’t pay income tax.

3. St. Jean Cap Ferrat (France)
Price: $5,853 per sq. ft.
What you get for $1.5 million: Small studio apartment
Annual price change: 39%

St. Jean Cap Ferrat on the French Riviera continues to be popular with European aristocracy and the super-rich, such as billionaire Paul Allen, who enjoy the gorgeous beaches and warm weather.

4. Courchevel (France)
Price: $4,710 per sq. ft.
What you get for $1.5 million: Studio apartment
Annual price change: 5%

Like to ski and shop? This resort town high in the Savoie region of the French Alps is favored by the Russian elite and is known for expensive hostelries such as the Hotel Le Lana, fashion boutiques, and wild parties.

5. Hong Kong
Price: $4,507 per sq. ft.
What you get for $1.5 million: Studio apartment
Annual price change: 21%

Hong Kong’s real estate market has been driven by China’s strong economic growth. Despite limited space, real estate demand on the island has started to slow, and prices are softening as the effects of the U.S. credit squeeze spread.

6. Manhattan
Price: $4,320 per sq. ft.
What you get for $1.5 million: Studio apartment
Annual price change: 25%

At the high end, Manhattan continues to boom even as the credit crunch deepens. In fact, in the first quarter of 2008 average prices were up 19% and the price per square foot was up 16%, according to the Corcoran Group. There are several reasons: First, the city has been shielded from the subprime crisis, largely because its co-ops and condos are well out of reach of most buyers with poor credit and shaky finances. Second, it remains a popular destination for movers and shakers in the financial, entertainment, and media world. Last, because of the weak dollar it is more affordable than ever for wealthy foreigners looking for a Manhattan pied-à-terre.

7. Cortina d’Ampezzo (Italy)
Price: $3,028 per sq. ft.
What you get for $1.5 million: 1 bedroom
Annual price change: 22%

The Northern Italian resort town is a popular second-home destination for ski buffs and Milan’s business elite. Prices for prime European vacation homes have benefited from the growth of the world’s population of high-net-worth individuals.

8. Portofino (Italy)
Price: $2,692 per sq. ft.
What you get for $1.5 million: 1 bedroom
Annual price change: 14%

Although there’s no beach, the harbor of this resort village on the Italian Riviera is packed with yachts owned by the world’s rich and famous. The village is about 20 miles from the Genoa airport.

9. Singapore
Price: $2,423 per sq. ft.
What you get for $1.5 million: 1 bedroom
Annual price change: 31%

The city’s high-end real estate has benefited from an influx of foreign buyers and has been particularly strong close to the Orchard Road shopping area and on the island resort of Sentosa.

10. Tokyo
Price: $2,334 per sq. ft.
What you get for $1.5 million: 1 bedroom
Annual price change: N/A

Despite traditionally astronomical prices and cramped living conditions for all but the very wealthiest, Tokyo’s market is beginning to slow as a result of the credit crunch and a heavy supply of new condos that have recently come on the market.

See Moscow, Paris, and more of the world’s most expensive cities…

The number of foreclosed homes owned by lenders continues to rise despite signs that they are increasingly willing to slash prices to sell those properties.

Lenders and investors in mortgages owned about 660,000 foreclosed homes in April, up from 493,000 in January and 231,000 in January 2007, according to First American CoreLogic, a research firm based in Santa Ana, Calif., that collects data from lenders and county clerks. The April total works out to about one in seven previously occupied homes available for sale nationwide.

A surge in defaults has increased the inventory of bank-owned homes, known in the trade as REO, for “real estate owned.” By cutting prices, lenders have managed to increase sales of such homes sharply in recent months in some cities hit hard by foreclosures, including Las Vegas, Detroit and Sacramento, Calif., local real-estate brokers say.

With home prices falling, “holding the assets means further losses,” said Mark Fleming, chief economist for First American CoreLogic. Some lenders now are cutting prices as often as every 20 days on homes that aren’t selling, said David McCarthy, chief executive officer of Integrated Asset Services LLC, a Denver-based company that helps banks value and sell REO homes.

But lenders haven’t yet managed to catch up with the inflow of foreclosed homes. Mark Zandi, chief economist at Moody’s Economy.com, forecasts that the inventory of REO homes won’t peak before the end of 2009.

In dollar terms, foreclosed one- to four-family homes owned by lenders whose deposits are insured by the Federal Deposit Insurance Corp. more than doubled to $8.56 billion at the end of the first quarter from $3.59 billion a year earlier.

The REO glut is weighing on house prices in many areas, as banks tend to cut prices faster than other sellers. A new set of local home-price indexes, to be introduced this week by Integrated Asset Services, shows that the median price of homes sold in Riverside County, Calif., in April was down about 29% from a year earlier. The median price fell about 13% in Clark County, Nev., and 12% in Arizona’s Maricopa and Pima counties. Median-price comparisons can be skewed by shifts in the proportions of high- and lower-priced homes sold from one year to the next but provide a broad indication of market trends.

To avoid or at least delay losses, many lenders are trying to avert foreclosures by easing loan terms or giving struggling borrowers more time to catch up. Hope Now, an alliance of mortgage companies and investors, said last week that mortgage companies completed loan workouts for 183,000 households in April, up from 160,000 in March.

Meanwhile, long-term interest rates rose last week, marking another potential drag on the housing market. The average rate on 30-year fixed rate loans eligible for sale to government-sponsored investors Fannie Mae and Freddie Mac was 6.17%, up from 6.02% a week earlier, according to HSH Associates, a financial publisher