Real estate performance tumbled for the family offices sector last year, generating returns of only 1.4% compared with 8.7% in 2015, according to the latest UBS Global Family Office Report.
The report, which surveyed 262 family offices with an average size of $921m (£699m), said real estate “disappointed” in 2016 because it was the third-largest asset class in family office portfolios, accounting for 16.2% of all investment.
Property’s performance was particularly lacklustre as overall returns soared from 0.3% in 2015 to 7% in 2016.
Despite a muted performance, 45% of respondents said they were planning to maintain their investment in real estate and 40% said they would increase it.
Sara Ferrari, head of global family office group at UBS AG, said: “Family offices will have been disappointed by the returns generated by real estate investments after their impressive performance in 2015.
“That being said, family offices remain optimistic about the asset class in coming years. The long-term nature of real estate investing very much appeals to the mindset of the typical family office.”
The report also revealed rising interest in residential investment.
Although 56.6% of real estate investments targeted commercial properties, allocations to residential assets rose by four percentage points since 2016.
Meanwhile, half of all investment was concentrated locally and 68.4% of respondents listed location as a key factor when considering new real estate investments.
To send feedback, e-mail karl.tomusk@egi.co.uk or tweet @ktomusk or @estatesgazette
