These are important drivers of real estate market activity today and are likely to be even more important ones in the future.

Family offices invest and manage assets with the aim of preserving the wealth of the respective families. Information on what proportion of these assets is managed by professional family office structures is very limited. According to estimates, there are around 5,300 single-family offices worldwide, of which around three-quarters are located in North America and Europe. In addition to single-family offices managing the capital of only one family, there are also numerous multi-family offices that professionally manage the assets of up to several hundred families. 

While real estate was regarded as a safe asset class for family offices in recent years, the tide now seems to be turning, since the yields of government bonds on the one hand, and the financing costs on the other, have been soaring for months. In addition, the long period of low and stable inflation since the turn of the millennium is over. In the past several years, family offices have been able to leverage real estate assets on a long-term basis through very favourable loans, thus optimising cash-on-cash returns and the internal rate of return. This made it possible to achieve highly attractive spreads compared to bond yields in most regions, especially in Europe. Due to the recent interest-rate turnaround, this clearly positive leverage effect is now history for the time being – the changed environment will put upward pressure on real estate yields in some segments, with spreads narrowing markedly. Nevertheless, real estate has a number of features that continue to make it attractive for family offices – especially because of the usually very long investment horizon that family offices tend to favour.