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Real Estate - The Bedrock Asset for Family Offices

Global Family Office Report 2015: Largest Family Office Research Study undertaken offers insight into family office investments in real estate 


The average family office portfolio allocates approximately 13% to real estate, and there is a home bias in holdings according to The Global Family Office Report 2015, produced by Campden Wealth Research, in partnership with UBS. 

The average family office, with assets under management of USD 806 million, invested approximately USD 105 million in real estate activity in 2014, be it in residential or commercial real estate. 

Family offices prefer to invest locally or nationally for both commercial and residential property. Since real estate direct investment typically takes place in-house, this may be a reflection of the local knowledge and skill set of the staff. Where investments are made further afield, they are made with the expectations of higher returns, with international or regional investments coming with significant premiums attached, equating to an additional 2% return on investment per annum. 

The Global Family Office Report 2015 surveyed principals and executives in over 224 family offices (based in 37 different countries), with an average size of USD 806 million assets under management. Collectively, the participating family offices represented well over USD 200 billion in private wealth. 

“The higher investment returns expected for more far-flung property, is attributable to the higher costs and outsourcing requirements for investing in an unfamiliar environment,” explains Stuart Rutherford, Director of Research at Campden Wealth. 

Real estate remains a key holding for family offices. Philip Higson, Vice Chairman, Global Family Office Group, UBS AG notes: “Investments in real estate direct investment are truly the bedrock of family office portfolios. It also is noteworthy that this year’s research found that both beneficiary engagement, and the presence of an operating business, lead to increased allocations to real estate.” 

The data also reveals an ongoing affinity among family office for residential property, the result of past experience and the emotional appeal of family homes. Two-fifths (42%) of real estate direct investment by family offices is in the form of residential property – be this for their own use or as an investment on a buy-to-let basis. 

Stuart Rutherford, Director of Research at Campden Wealth highlighted the unique role real estate plays for family offices: 

“Not only does real estate provide a consistent return for family offices, it was a major contributor to the 6.1% return that the average family office made in 2014. Typically seen as more of a conservative asset holding, the muted performance of equities and other asset classes made real estate investment stand out.”

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