According to an annual Global Family Office report from UBS bank, it is proven that eight of 10 family invest in private equity as an asset class.
If one were to look at statistics alone, in the past five years more than 40% of family offices have double their private-market allocation. A deeper analysis of the numbers would suggest that 18% of all family office investments are in private equity real estate.
Going by what’s in the reports and surveys, family offices and private equity real estate comes across as a perfect match.
Why private equity real estate for family offices
A family office is set up with five Ps in mind. These are “perpetuity”, “prosperity”, “privacy”, “professionalism” and “personal”, says a Deloitte paper. Long term strategy for wealth management and wealth creation through passive income, tactical acumen for portfolio diversification and maximization of returns are some of the vital functions taken care of by a family office.
Wealth creation through family offices is primarily driven through entrepreneurial success. So, family offices with strong entrepreneurial past records are more likely to invest in private equity funds.
Family offices are driven towards long-term wealth generation that works well for generations to come. Other factors like environmental and social awareness make high net worth individuals invest in private equity to drive sustainable investment change.
Private equity is also considered a popular option to hedge against inflation, when compared to short-term volatility, which works in the best interests of a family office function.
Benefits of investing in private equity real estate for a family office
- Long term cash flow
Family offices tend to invest from a long-term perspective and hence wealth multiplier options work the best for them. Family offices can leverage real estate investments so that they can transfer assets across generations to come.
- Predictable appreciation
Family offices get one of the best appreciation values when they invest in private equity real estate. They consider it as an asset class as a safe capital space to work around with.
- Tax benefits
Unlike other investment options, when family offices invest in private equity real estate, there are multiple tax deferring benefits available which turn out to be a great advantage.
- Opportunity for portfolio diversification
It’s no new news that a diversified portfolio reduces the risks of volatility and provides higher returns with minimal consequences. This singular benefit transforms private equity real estate as the perfect diversification option for family offices to invest in.
In a fast changing economic contour based on the Federal Reserve’s interest rate policy, the domino effect on the economy in general, the investment climate in particular – family offices could rely on private equity real estate as a “safe haven” to not only protect from capital erosion, but also generate consistent, risk free, long term returns on their investment.
Why 33 Holdings for private equity real estate
At 33 Holdings, our three pronged capabilities of private equity asset management, property management and rehabilitation along with vertical integration in real estate gives us the benefit of tapping into multiple forays within private equity real estate to maximize investment returns for investors.
Be it asset acquisition, construction, managing a property and financial asset management rigour – there are systems, processes and technology in place for discipline, governance and compliance to ensure investors are protected at all times.
Family offices, with their objective of safeguarding the wealth estate and growing it consistently with long term wealth generation to increase the size of the family portfolio value – would find an ideal foil in a private equity real estate company.
The 33 Holdings investment relations team has specialists who can work with family office asset managers and guardians.