Focus of Single Family Offices in Europe: Asset Management or Real Estate Development?

Based on our database: Different types of Single Family Offices in Europe that focus on Real Estate

A very popular asset class for many single family offices is real estate. The European real estate boom of recent years has contributed to the fact that more and more HNWI investment companies are investing in office buildings, residential properties, hotels and more. However, there are very few analyses regarding the focus of activities, so that the approach of the SFOs in the real estate market is in a sense a black box. Our research in the European single family office market has shown that the approach of investors is quite different. The differences already start with the preferred asset classes. Some family offices focus on a specific asset class, while others invest in all property usage types. Relevant property types inlcude residential real estate, offices, commercial property, industrial units, hotels and hospitality, health centers as well as nursing homes. Another key differentiator between single family offices in Europe is which part of the value chain they cover. Our database of the most important Real Estate Single Family Offices contains companies that are active as asset managers, developers, pure investors, facility managers and more. The biggest difference probably exists between those companies that operate as asset management companies and those that are active as project developers.

Analysis: Share of European Single Family Offices that do Asset Management vs. Real Estate Development

The business model between asset managers and project developers is fundamentally different. Single family offices that are active in asset management take care of maintaining and increasing the value of their properties. Mostly, they buy real estate in order to hold it and sell it after a few years at a profit. Family offices, which appear as real estate developers, are characterised by the fact that they immediately revalue, convert and rebuild purchased real estate. In some cases, the buildings are kept in the portfolio, in other cases they are sold immediately. The question now arises as to which business activities are particularly popular with European single family offices. For this purpose, we have evaluated our list of the largest investment companies in Europe and come to an interesting result. Overall, asset management is somewhat more popular. 32% of all family offices active in the real estate sector appear as asset managers. Surprisingly, however, 24% of all companies in our database are active as project developers. A quarter of the single family offices with a real estate focus do not “only” invest, but intensively deal with the increase in value of the real estate or independently implement new construction projects. For (co-)investors and third party asset managers, single family offices thus represent an interesting clientele that they often overlook.

Picture Source: Daniel DiNuzzo

Lists of single family offices engaged in real estate development and asset management