Skip to main content

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.”

Comments

Post a Comment

Popular posts from this blog

Harvard's Endowment commits to a target investment range into real estate between 10% to 17% for 2016

Years ago, before the downturn I was paying very close attention to the investing allocation of my Alma Maters Endowments Investing Strategy HMC (Harvard Management Company), especially in the area of real estate.  I believe that not only was Harvard a great place to understand the importance of investment allocation strategies before the downturn but even more so since the downturn. In fact, investors who are looking to enhance the performance of their investment portfolios probably won’t find a better investment model than the one used by the $37.6 billion endowment for Harvard University. The entity in charge of managing the endowment, Harvard Management Company (HMC), has accrued an impressive investment track record across its 41-year history. As of fiscal year 2015, the endowment had produced an average annual return of 12.2% – 290 basis points higher than the average 9.3% return of a typical U.S. 60/40 stock and bond portfolio. The methodology behind HMC’s success i...
1 comment
Read more

5 Alternative Real Estate Asset Trends for 2017

In 2016, alternative assets continued to remain in the spotlight , attracting  increased investor attention  and delivering  outsized returns  compared to core property types. As we step into 2017, National Real Estate Investor online reached out to experts in the seniors housing, student housing, medical office buildings (MOB), single-family rentals (SFR) and data center sectors for the preliminary outlook for the year. Medical Office Buildings New medical office building (MOB) construction was prominent in 2016, according to Krone Weidler, of brokerage firm Marcus & Millichap. New MOB office deliveries in 2017 (based on preliminary construction data) are expected to meet or exceed totals from 2016, says Hilda Martin, principal at medical real estate data firm RevistaMed. At the same time, investors should expect cap rates in the sector to increase this year as well, Weidler notes, as a result of the Fed raising its benchmark interest rates. That should...
Post a Comment
Read more

"Family Offices NEED to be aware of the impact Blockchain and Cryptocurrencies will have on Real Estate Investing" Here's Why:

·         Blockchain has the potential to revolutionize how the real estate sector operates. ·         It will lower transaction costs  ·         It will provide family office investors easier access to international listings ·         Because of cryptocurrencies there will be no need to deal with different banking systems ·         It will allow the process of purchasing or selling a piece of real estate to be more efficient and accurate ·         Its already happening HOWEVER FAMILY OFFICES SHOULD BE AWARE THAT ·         Some cryptocurrencies have gone under ·         There has been fraud associated with a few them ·     ...
Post a Comment
Read more