Practice Briefing: The significance of real estate in family office portfolios

Purpose – Family offices are privately-held investment companies established to effectively manage the significant assets of high-net-worth families for the purposes of building the level of assets for future family generations. This practice briefing examines the significance of real estate in family office portfolios. Case studies of major family offices are presented, concerning their real estate portfolios. The strategic implications for family office portfolios and real estate professionals are also assessed. Design/methodology/approach – Using a diverse range of information sources, the significance of real estate in family office portfolios is examined. Case studies highlight the strategies used by family offices to obtain this real estate exposure. Findings – Family offices are significant investment players. They use a range of effective strategies to obtain their real estate exposure, including direct real estate, joint ventures, non-listed real estate funds, debt and real estate investment trusts. Their primary real estate investment focus is via direct real estate investment. Many leading family offices have significant real estate exposure in their family office portfolios. The use of both the traditional asset classes and the alternative asset classes is a strong feature of family office portfolios. Practical implications – Real estate is seen to be a significant asset class for family offices, with several important investment strategies used to obtain this real estate exposure. The real estate strategies used are delivered via both in-house teams and via real estate asset managers. A deeper understanding of real estate in family offices by asset managers is important for the effective delivery of the real estate agenda within family office portfolios. Originality/value – This is the first paper to examine the significance of real estate in family office portfolios. Major insights are provided concerning family offices and how they obtain their real estate exposure. The real estate investment structures used are seen to be different priorities to those used by other institutional investors, such as pension funds. This study expands our understanding of the significance of real estate in major investor portfolios.