Family Offices Double Real Estate Allocations
Family office real estate allocations rose from 26% to 39% of portfolios according to PwC data, with apartment and land deals jumping from $2.1B to $7.5B in H1 2025. Traders note that pros target below-market buys and rent upside while amateurs wait for price drops. The market is seeing a 5% year-over-year price rise with 10% inventory drop, creating opportunities for permanent capital in distressed situations.
- This shift towards real estate reflects a broader move to more stable assets, as overall family office deal volume reached a decade low in the first half of 2025. Family offices are focusing on fewer, larger, and more strategic deals, with a preference for quality over quantity. - The jump in real estate allocation to 39% in the first half of 2025 is the highest it has been since the second half of 2019. This comes after a period where real estate's share of family office investment had been generally declining, hitting a low of 26% in late 2023. - While some data shows a significant jump, other reports indicate a more modest increase. A UBS survey of 317 family offices found average real estate allocations rose from 10% in 2023 to 11% in 2024, with U.S. family offices driving much of that growth by increasing their allocation from 10% to 18%. - Family offices are increasingly engaging in "club deals," where they invest alongside other families or investors. This collaborative approach accounted for 69% of their transactions in the first half of 2025, allowing them to share expertise, diversify risk, and gain stronger negotiating leverage. - This trend is not isolated to real estate; 33% of family offices planned to increase exposure to unlisted real estate, compared to just 17% of other institutional investors like pension funds and insurers. This highlights their more opportunistic and contrarian investment style. - Beyond portfolio returns, family offices are drawn to direct real estate for the control it offers over investment decisions and its ability to provide steady, inflation-hedging income streams through rent. The tangible nature of the asset is also valued for wealth preservation across generations. - A notable recent transaction includes the family office of WeWork co-founder Adam Neumann leading a $525 million mixed-use real estate development project along the Miami River.
