Family offices — and the families that form them — often have roots in the area where the family got its start. And these roots can be broadly reflected in their real estate investments. The Global Family Office Report 2023 by UBS polled family offices around the world on their real estate investment strategies and found a preference for domestic, relatively low-risk investments:
* Direct investments in fully-owned physical real estate are the most popular form of real estate investment for family offices, accounting for 59% of investments by those with real estate investments in 2022. Investing with others to buy physical real estate and investments in direct closed-end funds were the next most popular ways to invest in real estate, each accounting for 14% of investments.
* Most of family offices’ real estate investments are domestic: 32% of real estate investments by family offices in 2022 were domestic commercial properties, and 30% were domestic residential. International commercial properties accounted for 24% of investments, and international residential for 14%.
* Most family office real estate investments are in the “core/core plus” risk category, meaning they are high-quality properties that are considered low risk and offer a focus on income. This category accounts for 59% of real estate investments. The “value-add” category, which focuses on higher-risk properties that may need improvements and have a focus on capital gains, accounted for 27% of investments. And “opportunistic” investments — distressed properties or new developments with the highest risk and the highest possible returns — accounted for 14% of real estate investments.
