Billionaires buy Miami compounds to build trophy empires

The gravitational pull of extreme wealth is warping the economics of real estate in Miami.

Suddenly, 2 + 2 = 5, and then some. Across the city, buyers are gobbling up neighboring lots to create large estates more valuable as a whole than their constituent parts. Meanwhile, the value of existing waterfront estates has entered the stratosphere. Simply put: “People want land,” says Brett Harris of Bespoke Real Estate. 

He’s marketing the prime example: 5940 N. Bay Road on La Gorce Island. A historic 22,000-square-foot, eight-bedroom, 16-bath mansion on 2.3 acres, it’s asking an incredible $169 million. Built in 1936, it’s the most expensive publicly listed home in all of Miami, thanks in part to a difficult-to-replicate 290 feet of water frontage.

But it’s also likely a teardown. If a buyer knocked it down to build a new 30,000-square-foot home “with every amenity imaginable,” Harris says the property could be worth nearly twice the current asking price.

For a sense of just how dramatically the post-pandemic influx of billionaire capital is distorting the market for outsize single-family estates here, get this: The property sold in 2001 for just $2.3 million. “This is what the überwealthy, the 1 percent of the 1 percent, are looking for,” he says. “This won’t exist ever again.” 

Down on Palm Island, three mansions at Nos. 190, 198 and 210 are on the market as a single parcel, with 300 feet of continuous waterfront and yacht dockage, for $148.5 million. Knock down one, two or all three of the homes and you’ve got a 90,000-square-foot lot — that’s more than one-and-a-half football fields — with room for all the pools, courts and playthings your heart desires. Right now, the three homes weigh in with 21 bedrooms, 25 full baths, 35,385 square feet, three pools and room for about 20 cars.

“Wealthy buyers coming to Miami are looking for privacy, security and trophy assets,” said Douglas Eliiman’s Fredrik Eklund, who has the listing. “This listing provides all three. Lots on Palm Island are typically limited to half an acre or less, and this compound spans more than two acres. That is almost unheard of. It’s the kind of scale you’d expect on the mainland, not on a private island just minutes from South Beach and Downtown Miami.”

But if you’re not quite a billionaire yet, there are still opportunities for a starter compound. Nos. 1155 and 1165 N. Biscayne Point Road on Miami Beach are on the market for just $18.9 million with Dina Goldentayer of Douglas Elliman. Together, they have seven beds and baths, 150 feet of waterfront and two pools on a 22,500-square-foot lot.

“If one lot is trading for $1,000 a foot for the dirt, the adjacent parcel is trading for $1,200 a foot — it’s easily a 20% premium,” says Goldentayer of the new math that’s reshaping the Miami market. “To create a compound, you need your neighbor to the left or your neighbor to the right. If the stars align and one of them happens to be willing to sell, and you’re a person of significant means, that is not the time to look for savings.”

Goldentayer notes that many compound creators aren’t trying to build the largest mansion possible. Instead, they often knock down one of the homes and fill the neighboring lot with amenities. “They say, ‘I already have a beautiful, modern house. What am I missing?’” she explains. The answer? “A wellness pavilion or a padel court. Padel is everything in Miami. So, they’re acquiring their neighbor for the substructure capabilities.”

Harris agrees. His clients want the extra land for padel courts, gyms and spas, not necessarily more house. “I have a client building two padel courts on his large property: one for when his kids train and another one for friends and tournaments,” he says. “These particular clients don’t necessarily need a larger home, but they want the land for parking, privacy and amenities.”