The Financial Times recently reported that family offices are "diving into new markets" to hunt down financial returns in response to the Federal Reserve and other central banks loosening monetary policy. The main focus of the article was on family offices investing in the US real estate market. In particular, it highlighted a recent report from the US based Family Office Exchange which suggested that family offices are re-evaluating traditional investment opportunities, such as public bonds and equity markets and instead turning their attention to direct investments in real estate and operating businesses.
The UK real estate market is also benefiting from this investment trend with family offices building up significant portfolios of UK commercial and residential real estate assets. A low interest rate environment combined with weak sterling exchange rates is making UK real estate assets a particularly attractive investment opportunity for international family offices seeking meaningful returns.
Whilst it is generally acknowledged that the UK commercial real estate market is at a late cycle stage with familiar concerns about high values and scarcity of suitable assets, the investment appetite of family offices for virtually all sectors of the UK real estate market - offices, residential, student accommodation, logistics, retail and hospitality - continues unabated.
Once, property advisers mainly sold malls to developers, retail groups or banks. Now, however, there is rising demand from family offices.