Just how much are family offices planning to invest into real estate in the next 10-20 years.
DJ Van Keuren
Family Office RE Executive I Co-Managing Member Evergreen | Founder Family Office Real Estate Institute | President Harvard Real Estate Alumni Organization | Advisor Keiretsu Family Office
The future investable capital is bright when it comes to family offices and their investments in real estate. Currently, there are an estimated 15,000 family offices in the world. Out of that number, approximately 43% or 7,300 represent the number of family offices in North America. The estimated wealth of those families is $10 trillion globally.?
AMOUNT OF INVESTMENT INTO REAL ESTATE FROM FAMILY OFFICES
According to the Annual Family Office Real Estate Institute's real estate investing study, a family's average allocation to real estate is 24.5%. That would mean that family offices allocate?$2.45 trillion?into real estate globally, of which $1.1 trillion will be invested in the US.
AMOUNT OF INVESTMENT INTO REAL ESTATE FROM INSTITUTIONS
The size of global institutional capital invested in real estate stands at $10.2 trillion. Of that $10.2 trillion, $3.7 trillion accounts for the amount invested into real estate in the Americas. That's a 3 to 1 ratio of institutional capital vs. family office capital invested into real estate.
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FUTURE ALLOCATION OF FAMILY OFFICES VS INSTITUTIONS
But the estimated amount of family capital transferred over the next 10-20 years is $65 trillion. Using the same percentage allocated to real estate from a family office (24.5%) would mean that $15.93 trillion will be invested into real estate on a global basis. That kind of capital is why many operators, sponsors, and institutional fund managers are vying for this capital source.
IS FAMILY CAPITAL A FUTURE SOURCE OF REAL ESTATE
But will this happen is the question. With 70% of families losing their wealth by the 2nd generation and 90% by the 3rd generation, these numbers seem unlikely to happen. But with real estate being a hard asset, nonliquid, and providing significant tax benefits and historical appreciation, it very well may be the best investment that a family can make to help weather the legacy storm. These investments include family office investments into private equity, venture capital, etc.
Time will tell what the outcome is, but from a "what to invest into," my bet is on investing in real estate to maintain a legacy and have wealth available for future generations.
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2 年Dj, thanks for sharing!
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2 年as much as makes prudent sense given their needs to allocate capital in this segment, economic operating environment at the time, needs for liquidity and the tax code for starters.
Helping Successful Individuals Eliminate Taxes On Ordinary Income & Sales of Highly Appreciated Assets, Real Estate, Private Equity & Reposition Tax Dollars to do MORE Tax Efficiently.
2 年It's amazing and astounding that 70% of families lose their wealth by the 2nd generation and 90% lose their wealth by the 3rd generation. Is it because their "experts" work in separate "silos" and don't have time, or the process to collaborate effectively or for other reasons? This is just unnecessary given the benefits of comprehensive advanced planning techniques when working with a collaborative team of "the best of the best" experts to uncover and explain the options to help the "Client" achieve their most important goals and then work together to implement them to ensure generational control. Makes on wonder: " Am I getting the best information available to make the best decisions possible?" "How can I vet and assemble this "TEAM" in a timely and cost effective manner without alienating my "trusted advisor(s) AND include them in the process so nothing done past or future considerations will be upset or create additional problems or challenges?" Having a Collaborative of TEAM of experts to support the family and their trusted advisor(s) is beyond priceless and can be material in helping to avoid the lose of family wealth while ensuring generational control.