Family offices maintain strong focus on residential and direct real estate investments

Family offices continue to allocate a significant share of capital to real estate, with a clear preference for direct investments and residential assets, according to a recent KINGSTONE Real Estate webinar focused on family office strategies in the current market environment.

More than half of family office wealth remains invested in property, and around 80% of these holdings are structured as direct investments rather than via funds. The findings are based on the KINGSTONE Family Office Real Estate Report 2025, which surveyed 32 family offices across the DACH region.

Participants in the discussion noted that many family offices view real estate ownership as part of an entrepreneurial investment approach, favouring direct control over assets and asset management. This preference continues to shape allocation strategies despite geopolitical uncertainty and regulatory pressures.

Residential assets lead allocations

Residential property remains the dominant segment. Multi-family housing accounts for the largest share of allocations at 37.5%, followed by office assets at 25%. While offices continue to be assessed selectively, residential assets are gaining further attention, supported by perceived entry opportunities in the current market cycle.

Investors generally position real estate as a stabilising component within broader portfolios, prioritising capital preservation and steady performance. Opportunistic strategies are used selectively rather than as a primary focus. Operational real estate sectors such as hotels and care facilities currently play a limited role in most family office strategies discussed.

Risk awareness shaping decisions

Family offices are increasingly factoring geopolitical developments and regulatory risks into their investment frameworks, particularly in relation to the housing market. However, these considerations have not triggered a fundamental shift in allocation strategy.

Structural trends—including demographic change, decarbonisation requirements and evolving workplace models, are also influencing long-term investment planning.

Tax and structuring remain key considerations

The discussion highlighted the importance of fiscal planning. Market participants are monitoring the expected inheritance tax ruling by Germany’s Federal Constitutional Court, although legal changes are not anticipated before 2027. In the meantime, advisors see continued opportunities for asset structuring and transfers within real estate portfolios.

Moderate expansion expected

Return expectations among family offices typically fall in the 4-6% range, depending on risk appetite. Most investors indicated plans to moderately increase their real estate exposure over the next 12 months, with Germany remaining a primary target market. Demand for direct investments is reported to be particularly strong as investors seek selective acquisitions in the current phase of the cycle.