The luxury condominium market in South Florida is facing a glut of high-end supply aimed at a shrinking pool of ultra-wealthy buyers, according to Eric Scheffler, Co-Founder and Managing Partner at Invictus Real Estate Partners. Scheffler, a New York-based expert with 31 years of experience and $2 billion in recent deals, warns that current development trends in Miami’s luxury condo sector are unsustainable and misaligned with real demand.

Current Market Assessment

Scheffler describes Miami’s high-end condo market as oversaturated, with developers competing for a limited number of buyers willing to spend $20 million or more on a single unit. “Miami is a very heavily saturated market, especially in the upper tier,” Scheffler said. “There are a lot of people chasing those $20 million apartments, and there aren’t that many people in the world that buy those things.”

The surge in luxury development has created a backlog of inventory, with several new towers coming to market as the number of qualified buyers stagnates. Scheffler points out that the timing of these projects is off, with many developments launching after the peak of buyer interest. “Looks like a great project. I feel like it should have been done three years ago,” he noted, referencing a recent luxury tower proposal.

Key Market Drivers

Several factors are driving this imbalance. Scheffler highlights the tendency of developers to overestimate demand at the very top of the market, often driven by ego and the pursuit of prestige. “Real estate by definition is you’ve got to have a big ego and a lot of hubris, because everything you buy, you’re buying it from somebody because you can do better than they’ve done,” he said.

Areas of Opportunity

Scheffler believes the best opportunities now lie in the mid-market segment, where demand is broader and less speculative. “A lot of people would be better served by just toning it back, taking their ego down, building something a little bit more mid market,” he said.

He advises developers to design smaller units and focus on controlling costs, targeting buyers priced out of the ultra-luxury bracket but still seeking new, well-located condominiums. This approach, according to Scheffler, would help projects appeal to a wider audience and reduce the risk of units sitting unsold for extended periods.

Challenges and Concerns

The current strategy of chasing ultra-wealthy buyers has led to increased competition among developers, driving up construction costs and lengthening absorption periods. “When you reach with aspirational design, to make your mark in the world is usually when, like Icarus, you reach too high, and that’s where problems happen,” Scheffler explained.

Strategic Recommendations

Scheffler recommends developers shift focus away from prestige projects and toward practical, mid-market investments. “Perhaps you should use smaller units, try to get your basis down. Design it down a little bit, just to hit a little bit more mid market,” he advised. He also noted that “the more boring things in our portfolio have been the moneymakers.”

Looking Forward

Scheffler predicts the Miami luxury condo market will face a correction as supply continues to outpace demand among ultra-wealthy buyers. He urges developers to recalibrate their strategies and target broader buyer pools to achieve sustainable sales. Without this adjustment, he warns, more projects will struggle with slow absorption and financial underperformance.