_The Knight Frank 150: Family offices set to expand real estate investment

According to The Wealth Report, Knight Frank’s flagship report, a survey of 150 family offices finds investors keen to broaden their exposure to real estate, a sector they perceived as offering growth potential and wealth preservation.

In November and December 2024, Knight Frank interviewed 150 single and multi-family offices across the globe. The family office (FO) panel comprised 121 single-family offices, 18 multi-family offices, as well as 11 heads of diverse structures. These FOs are headquartered in 29 cities across Asia, Europe, the Middle East and the Americas, with strong representation from London, Singapore, New York, Geneva, Sydney and Hong Kong SAR.

Ho-Pin Tung, Head of Private Office at Knight Frank Hong Kong, stated, “Hong Kong’s established reputation as a global financial hub and a leading centre for investment and wealth management makes it an attractive location for family offices. Its unique connectivity to the Chinese mainland opens up significant investment opportunities, allowing family offices to access to a plethora of investment options. Additionally, Hong Kong’s robust infrastructure and regulatory framework provide a stable environment for managing complex portfolios. As a result, many family offices are increasingly recognising the advantages of setting up operations in this dynamic city, reinforcing Hong Kong’s position as a prime destination for managing substantial family wealth."

Assets under management (AUM) averaged US$560 million, totalling more than US$84 billion across the 150 FOs. Around 40% of FOs surveyed had operating businesses with a focus on real estate within their portfolios.

Allocations to real estate rose over the past 18 months, with 28% of FOs increasing their allocation, compared with 17% reducing their exposure. The top real estate sectors for current allocations are led by offices (20%), luxury residential (17%), industrial (14%) and hotels (12%).

Antonio Wu, Head of Capital Markets for Greater China at Knight Frank, commented, “Despite the instability of the global economy, the hotel investment market has shown significant improvement as we stepped into 2025. In the past two months, three hotel transactions have been completed, including our recent sale of the Winland 800 Hotel in Tsing Yi to HKIA Accommodation Limited (HKIA) for HK$765 million. This acquisition demonstrates that investors remain confident in the long-term potential of the hotel market. With anticipated interest rate cuts in the U.S., hotels present valuable opportunities for buyers and savvy investors seeking stable rental income and significant property appreciation as the global economy and tourism industry recover.”

Future plans

Liam Bailey, Head of Global Research at Knight Frank says: “Despite concerns about the macro environment, 44% of respondents expect to increase their exposure to real estate over the next 18 months, compared, while only 10% plan to reduce their investments. The top three sectors in demand among FOs are Living sectors (14%), Industrial/logistics, (13%) and Luxury residential (12%).”

While the overall trend leans towards increasing exposure in real estate, FOs face several challenges in meeting their investment objectives. The biggest barrier to increased real estate activity is the difficulty in identifying reliable partners or operators (23%), followed by challenging tax regimes (20%), high competition for assets and the need for speed to access opportunities (19%). Regulatory and compliance barriers (17%) are also noted as major concerns.

The portfolio

Approximately 70% of real estate investments are domestic, the most domestically focused FOs are based in New Zealand (93%), Australia (90%) and the US (86%). The most geographically diverse portfolios are those of FOs based in Switzerland (31% domestically invested), Hong Kong SAR (33%) and Singapore (41%).

For most FOs, real estate investment is regarded as a medium- to long-term strategy, with few investments made with a sub three-year time horizon (3%). The proportions are similar for three-to-six-year (32%) and six-to-nine-year (28%) horizons, while the largest share of investments is made with an outlook of nine years or more (37%)

Residential property

Nearly two-thirds of FOs manage private family residential properties. The main objectives for this management are Family use and legacy (44%), Capital preservation (29%) and Diversification (20%), with Potential rental income coming in last at 7%. On average, FOs managing private family residential properties oversee 4.7 properties, ranging from 5 in Latin America to 4.2 in North America. Of those with an active family residential portfolio, 25% are considering the acquisition of property over the next 18 months, while 20% are considering a disposal of homes.

Next generation leaders

Baby boomers (60 to 78 years) lead in terms of primary decision-making across the panel, heading up 50% of the FOs surveyed. Gen X (44 to 59 years) is the next largest cohort, with 36% holding primary decision-making control.

The baton is slowly being passed to millennials (28 to 43 years), who make up the remaining leaders.

While primary decision-making responsibility appears to be tightly held by older age groups, 58% of FOs actively involve the next generation. While 35% of those who have involved the next generation have seen no shift in strategy, 47% have seen “some” shift and 18% have been rewarded by a “significant” shift.

Of the 150 family offices surveyed by Knight Frank, 58% said that the next generation is already involved in investment decision-making. Nearly 40% noted a subsequently change in their investing strategy, with 11% stating the strategy had “shifted significantly”.

The survey confirms that millennials and Gen Z are being prepared for primary decision-making positions. Almost one in ten respondents said millennials are already the primary decision-makers, while 44% said millennials hold secondary powers. Additionally, a fifth of respondents note that members of Gen Z hold secondary powers. Some 63% of our millennial respondents said they had already put money into sustainable investments, compared with just 35% of baby boomers.