Why Investors in Manhattan's Fanciest Condos Should Have S&P 500 Envy

Manhattan condominiums have gained a reputation in recent years as a favorite store of wealth for the global megarich. But what if all those those Russian oligarchs, Chinese industrialists, and U.S. hedge fund managers would have been better off investing in a boring index fund instead of some of the nation's hottest luxury homes?

To see how the top of the condo market fared against less glamorous investments, the real estate analysts at CityRealty looked at the average price per square foot across a collection of 100 prominent Manhattan condo buildings. The value of those condos increased 55 percent in the past decade, according to a new report, rising from an average of $1,530 per square foot in the second and third quarters of 2005 to an average of $2,371 in the same period this year. That was good for a compound annual growth rate of 4.5 percent—not strong enough to catch the 5.4 percent rise in the S&P 500 over the same period. Here's what the year-over-year increases look like.