Family office insights this week:

• Why family offices love real estate and how they invest in it

• Tell-tale signs of new money, and old money

• A candid book on success and failure from a real estate titan

• Podcast insights on prepping the next generation

• The hopes and fears of wealthy families in latest Julius Baer report

Family Offices and Real Estate: Trends You Need to Know

Real estate: the perfect match for legacy and growth 

Family offices love real estate. For those investing with a multi-generational outlook, it’s hard to find an asset class that rivals it.

With famously patient capital, family offices are well-matched with real estate’s long-term nature.

Real estate provides tangible value and enduring appeal—an ideal choice for families focused on preserving wealth and building a lasting legacy. Unlike many other investments, real estate offers stability along with reliable income streams.

According to a Citibank survey, family offices allocate around 14% of AUM to real estate, with the majority held directly.

Why Real Estate?

Family offices are well-suited to real estate. They’re usually not looking for a quick flip or a short-term gain. They think about investments that will benefit generations. Real estate, with its stability and regular income, is a natural fit.

Real estate offers family offices:

Stable cash flow: Properties can generate predictable rental income. That steady revenue stream supports operational expenses or other investments.

Capital preservation: Real estate is a solid hedge against inflation and market volatility. Land and property tend to hold or grow in value over time.

Tax benefits: Many family offices structure investments to maximize tax advantages, which real estate can often provide through deductions, depreciation, 1031 exchanges (US) and other means.

Legacy building: Families invest in properties not just for income but also to establish a tangible legacy. Many take pride in owning iconic buildings or land for future generations to manage, rent, or simply enjoy.

Types of Real Estate Investments for Family Offices 🏢🌳

So what types of real estate do family offices like?

Multifamily residential property stands out as the most favored RE investment, with commercial office and retail accounting for 28% and 16% respectively.

Real Estate investment in the US dominates global family office investment with 69% of RE investment focused in North America. Europe comes in second with 25% of investments. Oceana attracts 2% of FO investment, while Asia, Latin America, Africa and the Middle East attract only 1% each.

The following chart shows the distribution of FO real estate investment by US state:

A quick survey for family office subscribers…

Direct Ownership vs. Real Estate Funds 📈

Family offices tend to prefer direct ownership over investing through funds, but each approach has its pros and cons.

Direct ownership where the family office buys, holds, and manages the property directly. This offers more control and transparency. They know exactly what they own and can manage it as they see fit. But it does require significant expertise, as well as resources to handle property management.

Real estate funds provide access to a diversified portfolio managed by real estate professionals. These funds may be private equity or publicly traded REITs (Real Estate Investment Trusts). While funds offer less control, they also reduce the need for in-house management and allow family offices to leverage the expertise of experienced real estate investors.

The choice often comes down to preference, resources, and the family office's broader strategy.

Key Considerations for Family Offices in Real Estate Investment 🏦

The benefits of real estate are clear, but family offices need a clear strategy. That strategy should encompass buying property, managing risk, optimizing returns, and aligning investments with family goals.

1. Market trends: Real estate markets are highly regional. What works in San Francisco may not work in Dubai. Family offices need to understand the economic drivers, demographics, and trends in their target areas.

2. Timing: Real estate is cyclical. Family offices need to be cautious about when to buy, hold, or sell. In a hot market, it’s tempting to dive in, but overpaying can be a long-term setback. Timing any market is incredibly difficult, so family offices should be cautious when there’s hype in the air.

3. Risk tolerance: Different types of real estate come with different risks. A prime office building in a financial district is a different investment than a rural farm or an apartment complex. Family offices should assess their risk tolerance and choose investments accordingly.

4. Property management: Owning property is only part of the equation. Managing it is just as important. Family offices either build in-house expertise or partner with reliable property management firms to handle leasing, maintenance, and tenant relations. A lot of family offices have deep experience in property management.

5. ESG and impact investing: Real estate presents an opportunity for family offices interested in environmental, social, and governance principles. Sustainable buildings, affordable housing, and green spaces align investments with social values. Surveys suggest that this is increasingly important to the younger generations.

Real Estate and Wealth Preservation: The Generational Impact 🏛️

One of the most attractive aspects of real estate for family offices is its potential for wealth preservation. Unlike stocks or other assets that can experience wild fluctuations, real estate provides stability. It’s a way to store wealth in tangible assets that can be passed down from one generation to the next.

Some families even view real estate as a cornerstone of their identity. For example, a family may hold onto iconic properties that have become part of their legacy. Owning historic buildings, landmark estates, or even a portfolio of unique commercial spaces can create a narrative for the family that extends beyond financial return.

In this way, real estate serves as both an investment and a story—a way for families to tie their wealth to something meaningful and lasting. 🏘️

The Challenges for Family Offices

The advantages of real estate are clear, it’s not without challenges:

Illiquidity: Unlike stocks or bonds, real estate is illiquid. Selling property can take months or even years, and in down markets, finding buyers can be difficult. (It is sometimes argued that illiquidity of real estate is in fact beneficial—forcing owners to take a long-term view).

Economic shifts: Changes in interest rates, government policies, or economic conditions can impact property values and rental income.

Regulatory risks: Local and national regulations, from zoning laws to tax codes, can change suddenly, impacting property values and operating costs.

Family offices typically manage these risks by developing long-term relationships with real estate professionals, lawyers, and tax advisors who understand the nuances of the markets they operate in.

A Strategic Asset for Family Offices 🏆

Real estate is more than an asset class for family offices. It’s a way to achieve stability, generate income, and create a lasting legacy.

It’s both a financial tool and a reflection of family values and aspirations.

With their focus to grow and preserve wealth, real estate is a pillar in family office portfolios—a strategic asset that supports not only the family’s financial goals but also its legacy.

Whether through direct ownership, partnerships, or funds, real estate offers family offices opportunities that align with their needs. And in a world of changing markets and new challenges, real estate remains one of the most reliable ways for families to secure their future.

𝕏 highlights

A look at the hopes and fears of wealthy families.

These got people talking (new money, old money, it’s all the same to me).

Private market firms embracing social media. This trend is only going to accelerate. Our November Dealflow newsletter will be out in a couple of weeks!

 💼 where to work

Three notable family office job opportunities below … plus five experienced candidates looking for new opportunities in this week’s Careers newsletter.

Finance Director, London, Single Family Office  

Personal Assistant, Phoenix, Single Family Office

Wealth Advisor, Detroit, Single Family Office

📚 what to read

** Christmas is approaching… a good time to find new books. What’s the best book you read this year? Hit reply and let me know ** 

Am I Being Too Subtle? by Sam Zell is a riveting memoir from the billionaire real estate investor. Zell describes his unconventional approach to business, his knack for identifying undervalued assets, and his fearless pursuit of opportunities. It’s a candid look into his successes, failures, and the mindset that challenged corporate norms.

📻 what to listen to

A fascinating conversation between Mark Tepsich and Kirby Rosplock in the UBS podcast “In Focus: Family governance and educating the next generation”

📺 what to watch

And just a reminder that real estate can go both ways. One of my favorite business movies (and a great book by Michael Lewis), The Big Short tells the story of the 2008 financial crisis caused by the housing market collapse and how a group of unconventional investors short the housing market.

And finally…

It’s been a busy week. The second Careers newsletter went out on Wednesday and it’s been even more popular than the first. It’s so good to see family offices and candidates connecting.

The next Dealflow newsletter will be out in two weeks (sharing deals for a family office audience).

What else is going on behind the scenes... We are building a new website with some great resources to help inform and connect the family office industry. Watch this space!

If you have friends or colleagues who you think would benefit from the newsletter, please spread the word!

Family Office Buzz will be back on Monday with the best content on family offices and beyond.

Until next week, see you on 𝕏 or LinkedIn.

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