Two-fifths, or 42 percent, 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 – according to a report from Swiss financial services company UBS and London-based research firm Campden Wealth.
“The data reveals an ongoing affinity among family office for residential property, the result of past experience and the emotional appeal of family homes,” said the Global Family Office Report 2015.
UBS and Campden Wealth surveyed principals and executives in over 224 family offices based in 37 different countries, with an average size of $806 million assets under management. Collectively, the participating family offices represented well over $200 billion in private wealth.
The report also found that the average family office invested approximately $105 million in real estate activity in 2014, be it in residential or commercial real estate. This equated to an average portfolio allocation of approximately 13 percent to real estate.
Family offices also 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 the skillset of the staff, according to the report.
“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,” explained Stuart Rutherford, director of research at Campden Wealth.