Family Offices Boost Real Estate Investments: Strategies from Knight Frank

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Major private investors are increasingly entering the real estate market. According to a Knight Frank report [leech=https://www.knightfrank.com/wealthreport/article/2025-03-05-the-knight-frank-150-global-family-office-investment-strategies], around 42% of respondents plan to increase allocations to property over the next 18 months, despite ongoing macroeconomic risks.

Investment Activity and Portfolio Structures

Knight Frank surveyed 150 family office organizations:

121 manage assets exclusively for a single family,

18 serve multiple families,

11 use hybrid structures.

The study spanned 29 cities including London, Singapore, New York, Geneva, Sydney, and Hong Kong. The average assets under management were $560 million, with a total exceeding $84 billion.

Real estate remains a core component of investment strategies. Direct property allocations ranked third in popularity after equities and cash, while indirect investments came seventh. Over the past 18 months, 28% of respondents increased their property exposure, while 17% reduced it.

Preferred sectors include:

office buildings (20%),

prime residential (17%),

industrial assets (14%),

hotels (12%).

Geographic distribution varies significantly: 93% of family offices in New Zealand invest domestically, compared to 90% in Australia and 86% in the U.S. In Switzerland, Singapore, and Hong Kong, by contrast, diversification dominates, with domestic investments at just 31–41%.

Investment Approaches and Objectives

For most family offices, property forms part of a broader allocation alongside venture capital, public equities, and private investments. Some treat real estate as part of their operating business, while others see it as a bond-like asset offering inflation protection and steady income.

The most common approaches include:

opportunistic (32%),

value-add (30%),

core (16%).

More than one-third (34%) prefer direct investments, while 19% use funds and 13% joint ventures.

Time horizons are typically medium- to long-term:

37% target holding periods over nine years,

28% plan six to nine years,

only 3% consider projects shorter than three years.

Primary goals include:

capital growth (42%),

capital preservation (23%),

income generation (19%).

The average target return for unleveraged real estate investments is 13.8%.

Private Residences and Cautious Strategies

Private residences hold strong appeal: nearly two-thirds of family offices manage residential assets for personal use, typically 4–5 properties per owner. Their main functions include:

family use and legacy (44%),

capital preservation (29%),

diversification (20%).

Rental yield is secondary, with only 7% citing it as a key factor. Among current owners, 25% plan new acquisitions within 18 months, while 20% may sell some assets.

Caution is rising: some investors aim to exit underperforming projects, particularly those misaligned with long-term strategies. Concerns include high construction costs, unstable interest rates, and slowing economic cycles. Still, 42% plan to increase real estate exposure, while only 10% expect to reduce it.

Constraints and Priority Sectors

Most in-demand sectors for family offices include:

residential (14%),

industrial/logistics (13%),

luxury residential (12%).

Preferred new opportunities focus on mass housing, prime housing, logistics, and hotels.

However, significant challenges remain. Key barriers include:

lack of reliable partners (23%),

complex tax regimes (20%),

high competition for assets and need for rapid response (19%),

regulatory hurdles (17%).

Behavior of the Ultra-Wealthy

The report also highlights ultra-high-net-worth individuals (UHNWIs). Experts note that 268 new $10M+ individuals and 11 $100M+ individuals appear daily worldwide. Over 60% of UHNWIs are concentrated in the U.S. and China.

Dubai leads the super-prime segment with 20% of global transactions.

In the U.S., Miami and Palm Beach are booming, while New York remains stable.

London has lost 17% in sterling and 35% in dollar terms since 2014 but still ranks among the top three global markets.

Monaco leads Europe, while Singapore overtook Hong Kong in Asia despite a 60% non-resident tax.

The profile of UHNWIs is also shifting:

The average billionaire age rose from 63 in 2014 to nearly 66 in 2024.

Tech billionaires are younger, averaging 57.

Women have increased their share of wealth by 38% over the past decade, but still control only 11% overall.

Investment priorities are evolving:

65% of millennial UHNWIs prefer socially driven assets.

Up to 80% pursue sustainable ESG portfolios.

This trend drives demand for “community real estate” – projects combining housing, club infrastructure, and networking spaces. These formats are particularly attractive to Gen Z and millennial investors.