The New Rich Are Building Bigger

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Does Ambani really need 48,000 square feet of space for his six-person family? Of course not. But like a lot of people who have worked hard for their money, he wants it. "These are trophy properties," says Goodwin. "They've won the game now, and this is their prize."

A Home, a Statement, a Trophy

Self-made millionaires and billionaires in particular are notorious for building or buying over-the-top homes. "It makes them more willing to make a statement," Goodwin says. "Old money tends not to like to show off as much." These trophy homes are usually "very large, very interesting, and not necessarily resellable," in Goodwin's words. But he wouldn't call them tasteless. "We always joke about new money being garish, but I think that's more of the old money being jealous that they can't let go like that," he says.

Not all self-made billionaires live in a mansion like Rennert's or a tower like Ambani's. Although he has grown a fortune investing through holding company Berkshire Hathaway (BRKA), Warren Buffet still lives in the same Omaha, Neb., house that he bought in 1958 for $31,500. On the flip side, many who have inherited wealth continue to live lavishly.

"Paris Hilton is third-generation wealthy, yet she is in that same category that Donald Trump is," says Laurie Moore-Moore, president of the Institute for Luxury Home Marketing. "It's really less about old money and new money, because most of the wealthy are new money."

There are six categories of wealth, Moore-Moore explains. About 15% of the world's wealthy (defined as those with more than $1 million in investable assets) fall into a category she refers to as the "flamboyantly wealthy." She adds, "Those are the people that really want to make a statement. They're looking for something exclusive that leaves no question in the minds of others that they're wealthy."

The Nouveau Nouveau Riche

As Ambani's tower home proves, more and more newly superrich foreigners are finding themselves in the "flamboyantly wealthy" class. In 2004, Ambani's fellow countryman, Arcelor Mittal (MT) Chief Executive Lakshmi Mittal, spent more than $100 million on a mansion on London's exclusive Kensington Place. Sheikh Hamad of Qatar recently took nearly $200 million of his petrodollars to London and bought a 20,000-square-foot penthouse overlooking Hyde Park. Canning Fok, managing director of Hong Kong-based holding company Hutchison Whampoa (HUWHY), recently handed over $44 million for "Hong Kong's Chateau de Versailles." And in the English countryside, Russian oligarch Roman Abramovich owns a modest $34 million, 450-acre property.

Today's big-spending billionaires may have their pick of ultra-luxury properties, including Donald Trump's $125 million Palm Beach property, a Versailles-inspired $125 million Los Angeles mansion, and a Turkish entrepreneur's $99 million London creation.

Who might be the next to snatch up one of these modern palaces—or build an even bigger one of their own? Moore-Moore offers her prediction: "One thing I would say is the Russians are coming, the Russians are coming!" she says. Will they be criticized for their extravagance and poor taste? Probably. But they likely won't mind.

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Roney is Real Estate writer for BusinessWeek.com.