A new report reveals that family offices plan to increase their real estate investments in 2025. But which sectors do they favor right now?
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Episode Transcript Summary
Family offices are expected to increase their real estate investments in 2025, despite ongoing market uncertainties. In this episode of Fund Playbook, Jimmy Atkinson and Andy Hagans analyze data from the Knight Frank Wealth Report, which surveyed 150 family offices worldwide. The discussion covers which real estate sectors family offices are targeting, their investment objectives, key challenges they face, and strategies for building relationships with them.
Family Offices Are Reentering the Real Estate Market
One of the biggest takeaways from the report is that 44% of family offices plan to increase their real estate allocations in 2025, even though the commercial real estate market has been sluggish over the past two years.
At the IMN Family Office Conference in late 2023, industry leaders noted that ultra-wealthy families had been sitting on capital, waiting for asset valuations to correct. Now, despite interest rates remaining elevated, many believe that real estate prices have adjusted enough to present new investment opportunities.
The Real Estate Sectors Family Offices Are Targeting
The survey revealed that office space topped the list of sectors that family offices plan to allocate more capital to in 2025. This was unexpected, given the continued struggles of the office market following the pandemic. The panelists believe this may indicate a deep value investing strategy, with family offices looking to acquire office properties at steep discounts.
Other sectors attracting capital include luxury residential, industrial properties, hotels, and multifamily housing. Hotels, in particular, are seeing increased interest due to a post-pandemic rebound in travel demand and limited new hotel supply.
The shift toward office, luxury residential, and hotels suggests that family offices may be taking a contrarian approach, identifying opportunities where others see risks.
Long-Term Investment Approach of Family Offices
Unlike most investors, family offices typically have very long investment horizons, often spanning decades or even generations. The report found that more than 50% prefer investment durations of six years or longer, with 37% favoring holding real estate for at least a decade. Only 3% seek short-term real estate investments of three years or less.
This long-term perspective allows family offices to ride out market cycles, making them less sensitive to short-term economic fluctuations than institutional or retail investors.
The Biggest Challenges Family Offices Face in Real Estate
The report identified three primary obstacles family offices encounter when deploying capital into real estate:
- Finding reliable operators and investment partners. Many family offices lack internal real estate expertise and rely on outside sponsors to manage projects.
- Navigating complex tax regulations. High-net-worth families often use tax-efficient strategies like 1031 exchanges, Opportunity Zones, and estate planning structures, but tax law changes create uncertainty.
- Dealing with intense competition for prime assets. Even in a slower market, competition for high-quality real estate remains fierce.
Given these challenges, building relationships and trust with family offices is crucial for fund managers seeking to raise capital from them.
Investment Objectives of Family Offices
Contrary to expectations, the survey found that growth—not wealth preservation—was the top stated investment goal for family offices. However, in practice, wealth preservation remains the dominant concern. Most family offices follow the same three golden rules:
- Don’t lose money.
- Don’t lose money.
- Don’t lose money.
This explains why family offices prefer experienced operators with proven track records, particularly those who have navigated multiple market cycles.
How Fund Managers Can Build Relationships with Family Offices
Raising capital from family offices is not a quick process—it requires long-term relationship building. The panelists offered several insights:
- Networking at family office conferences is one of the best ways to meet decision-makers.
- Establishing authority through content, such as blogs, YouTube, or podcasts, can attract inbound inquiries.
- Understanding alignment is critical—family offices won’t invest in deals that don’t fit their strategy, no matter how strong the return potential.
- Providing flexible investment terms can help secure large checks from family offices, as they often negotiate preferential treatment.
It’s also important to recognize that every family office operates differently—if you’ve met one, you’ve met just one.
The Role of Operating Businesses in Family Office Portfolios
The survey found that 69% of family offices own operating businesses, often in industries where the family originally built its wealth.
- Family offices that made their fortune in real estate tend to stick with real estate investments.
- Others focus on private equity and operating businesses, often reinvesting in sectors they know best.
- Some family offices maintain highly concentrated portfolios, while others emphasize diversification.
Many family offices invest in operating businesses through direct ownership, private equity, or venture capital. However, their risk tolerance varies widely.
Capital Raising Timelines – How Long Does It Take?
The panel addressed a common question: how long does it take to raise capital for a fund or syndication?
- Some deals are funded in hours—such as Origin Investments’ $105M Opportunity Zone fund, which raised all its capital in 17 hours due to a large pre-existing investor base.
- Other funds take years to fully raise, even for experienced fund managers.
- Market cycles impact capital availability—raising money in 2021 was much easier than in 2024-2025.
Successful fundraising often comes down to preparation, network size, and investor trust.
Final Takeaways
- Family offices are increasing their real estate allocations in 2025, signaling renewed confidence in the market.
- Contrarian investments in office, luxury residential, and hotels indicate a shift toward value-hunting strategies.
- Family offices take a long-term view, often investing for decades rather than short-term cycles.
- Top challenges include finding reliable operators, tax complexities, and competition for assets.
- Building relationships with family offices takes time, and fund managers must demonstrate trustworthiness, expertise, and flexibility.
Family offices are becoming a dominant force in private real estate investing. Understanding their strategies, risk tolerances, and investment objectives is key for fund managers looking to raise capital from this exclusive group.