Family Offices Bullish on Real Estate Investments
Increased Allocation to Residential and Industrial Sectors
A recent report by Knight Frank reveals that nearly half of family offices plan to increase their allocations to real estate in the coming months, with a focus on residential and industrial sectors. This positive outlook on property investing follows a rebound in the commercial real estate market, which contracted by almost half in 2023 but has since increased by 8% to $806 billion, led by the industrial sector.
Medium- to Long-Term Strategy
Most family offices view property investments as a medium- to long-term strategy that can grow and preserve wealth. According to the Knight Frank Wealth Report, which surveyed 150 single and multifamily offices globally that managed an average of $560 million each, 28% of family offices increased their allocations to real estate over the past 18 months, with office space being the top category, followed by luxury residential, industrial properties, and hotels.
Investment Trends
Looking ahead, 44% of family offices intend to boost their allocations, with firms in the US, Canada, and the UK being the most active buyers. The report also highlights that most family offices are investing in their home countries, especially those based in the US, New Zealand, and Australia. Others, such as those based in Switzerland, Singapore, and Hong Kong, have a more international strategy, allocating just a third of their investments to domestic properties.
Global Wealth Growth
The number of high-net-worth individuals, those with more than $10 million in assets, increased 4.4% last year to 2.3 million globally, according to the report. North America showed the greatest growth, followed by Asia and Africa.
Conclusion
The overall positive outlook on property investing is a testament to the resilience of the real estate market and the confidence of family offices in its potential for long-term growth and wealth preservation. As the market continues to rebound, private capital is poised to play a critical role in the recovery, driving renewed momentum in 2025 and beyond.
FAQs
Q: What is the current trend in family office investments in real estate?
A: Nearly half of family offices plan to increase their allocations to real estate in the coming months, with a focus on residential and industrial sectors.
Q: What is the average amount managed by each family office?
A: The average amount managed by each family office is $560 million.
Q: Which regions have the greatest growth in high-net-worth individuals?
A: North America, Asia, and Africa have shown the greatest growth in high-net-worth individuals, with 4.4% increase last year to 2.3 million globally.
