FEB. 22, 2023: How family offices are weathering the real estate downturn

Feb 25, 2023
1 year ago
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With interest rates rising across the globe, it’s no surprise we are seeing a double-digit drop-off in real estate investing. After nearly six months of rate increases, we thought it would be a good time to look at how family offices and ultrahigh-net-worth individuals are navigating this tumultuous period. After all, many fortunes are built, and preserved, on the back of the real estate market. 

In reporting this story, Erin Chan Ding found that many family offices view the downturn as an opportunity to buy into the dip. Sure, they’re being a bit more cautious. But they’re not letting their caution get in the way of opportunity. As billionaire Richard Branson once said, “The brave may not live forever, but the cautious do not live at all.”

We are also excited to bring you an interview with Amit Bhouri, a pioneer in impact investing. As the CEO of the Global Impact Investing Network, Mr. Bouri addresses what he sees as a backlash against ESG investing in the U.S. as well as his long-term vision for impact investing. 

And as always, we’d appreciate any comments, ideas and insights that would make this newsletter more useful. Please forward these to Executive Editor Frederick Gabriel at [email protected] or our editor, Marcus Baram, at [email protected].

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HANDPICKED: How family offices are weathering the real estate downturn


The rocky real estate market has family offices revising some long-cherished strategies for investing in real estate. 

Across the board, real estate investors are pulling back dramatically on home buying, with purchases falling 46% year over year in the fourth quarter, according to a report released last week by Redfin. The drop-off represents the largest decline in investor-led purchases since 2008, when investor purchases fell 45.1%, according to the report. 


  • Because family offices often produce cash even in unsettling markets, the real estate slump could present new opportunities for investors with capital.
  • Because rents are often indexed to inflation, real estate offers family offices inflation protection and capital appreciation. 
  • Families like real estate because “it’s tangible. … They can go visit their properties.” They also know that real estate is an important part of a long-term investment portfolio.
  • Family offices may not be buying real estate—but they’re also not selling. They’re evaluating existing holdings and looking for opportunities to get back in the market.
  • Family offices are always looking for ways to minimize taxes through qualified opportunity zones or QOZs.
  • Rather than just buy a building and let it sit, family offices should work with a local partner in a real estate market to generate the maximum cash flow from a property.

Rising rates in “advanced economies” have had a worldwide effect on real estate, resulting “across the board in problems in servicing existing loans, refinancing existing loans, buying new properties, using new loans that might be more expensive,” said Michael Kovacs, a founding partner at London-based Castleforge Partners, a global private equity real estate manager. “And it makes the properties that you’re buying at the old prices kind of unattractive.”

However, investors such as Kovacs and family-office advisers remain confident in real estate as an alternative investment and see this as a time when families can study the market for opportunities.

Because a significant portion of family offices often own businesses that still run and produce cash in unsettling market cycles, the downturn in real estate pricing could present “new opportunities for investors with capital,” Kovacs said. “Oftentimes, it’s only the family-office investor that also has the capital to take advantage of that. So I do think that family offices, many of them are probably primed for the ability to take advantage of the difficult times in real estate.”


Family offices whose businesses do not depend on real estate often incorporate real estate investments into their portfolios for three main reasons, said Aaron Bates, the Boston-based head of ultrahigh-net-worth and growth strategies at Bernstein Private Wealth Management:

1. Real estate provides steady, consistent cash flow.

2. Real estate is a hard asset that’s an alternative investment to liquid markets.

3. As an asset, real estate incorporates multiple familial layers, so the investment offers future generations the opportunity to make important business decisions within the construct of a family office.

Nancy Curtin, chief global investment officer at London-based Alvarium Tiedemann or AlTi, a global investment management firm and multifamily office, said rents are often indexed to inflation, meaning real estate gives family offices “natural inflation protection and capital appreciation.” 

“But most interesting to a family is it’s tangible. So when we offer these real estate opportunities, they can go out, they can see them, they can touch them, they can go visit their properties. And clients like that, and they do understand that being in the right place in real estate is an important component of a long-term investment portfolio.”

What’s more, Bates said, “In a higher-risk environment such as the one we have today, real estate plays an outsize role in how families view real estate within an overall asset allocation.”


In his conversations with family offices, Bates said he has learned that several are assessing urban areas such as New York and Los Angeles for opportunities.

“The key here is they’re looking,” he said. “But what I’m hearing from a lot of family offices we work with is that they aren’t necessarily acting on acquisition right now. But they’re also not selling, so they’re holding their existing real estate holdings, reevaluating them from an income perspective, not necessarily selling into this market and then eyeing the market for opportunities to determine when in this cycle is the most appropriate time to step in.”

Amid the uncertainty in real estate, Bates said, he has not seen a decline in interest in qualified opportunity zones or QOZs, particularly because family offices are often values-driven and looking to make a difference with their real estate investments.

And of course, there’s the tax savings.

“I can speak with a sort of high level of certainty that it is ubiquitous across the family-office space that family offices are always looking for ways to minimize tax,” Bates said. “And a QOZ is one way that one can minimize tax.”

AlTi is focused on “quality real estate with great tenants and growth areas,” Curtin said, particularly opportunities such as multifamily housing, student accommodations, e-commerce and industrial parks.

Strategically, she said, AlTi stays in growth parts of the real estate market where there’s a deficit in supply versus demand, such as in the Sun Belt.

“The rents may not go up as much as they did in prior years,” Curtin said, “but they’re still pretty firm. And there’s still migration.”

Kovacs of Castleforge Partners said a lot of the family offices he works with are increasing their real estate exposure and buying into the dip. But family offices can no longer just buy a building and let it sit, he said.

“They’ve got to figure out if they have the local presence and expertise to best maximize a property’s cash flow potential,” he said. “If they don’t, it may make sense to work with a local partner who knows how to navigate in a particular market and generate the maximum cash flow from a particular property. 

“That kind of honest awareness and an assessment of one’s own capabilities will probably serve a family office best in this volatile environment.”


Amit Bouri

Amit Bouri, considered a pioneer in impact investing, co-founded the Global Impact Investing Network (GIIN) in 2009 following the publication of the Monitor Institute’s landmark report, Investing for Social and Environmental Impact. As CEO of GIIN, Bouri leads the largest global community of impact investors dedicated to scaling, measuring and integrating the social and environmental factors in all investment decisions, thereby mobilizing more capital toward impact. 

What sparked your interest in launching the Global Impact Investing Network?

Before launching the GIIN, I was working for the Monitor Institute, an experience that helped me understand the potential of how investment dollars could help drive social and environmental impact. While in my role, I was constantly wondering: “What would it take at a systemic scale to move the needle on global inequality, advancements in global health and turning the tide on climate change?” 

What I found was that this idea requires more than just driving transactional value. It requires a network where investors can share best practices and opportunities on a global scale and connect nodes of leadership where ideas can flow, with the end effect of moving capital toward positive impact. This is what led to the founding of the GIIN and then, subsequently, our IRIS+ system, which is designed to provide investors with common and standardized metrics to understand the impact. Our work with IRIS+ explores areas where investors are focused, such as mitigating climate change, promoting sustainable agriculture, addressing racial and gender inequality, and more.

What has environmental, social and governance (ESG) and diversity, equity and inclusion (DEI) integration done to either clarify or confuse impact investing?

We believe ESG and DEI integration are helping to set the stage for impact investing. Here’s a bit of a breakdown in what we’re seeing:

Many investors view ESG through a lens of financial materiality or factors that an accountant would consider as tied to financial performance. For example, having good worker safety policies can reduce the risk of an incident or disaster that could have financial implications for a company. 

Impact investing considers financial materiality as a starting point but takes it a step further by designing strategies to move the needle on the world’s biggest problems. An impact-investing strategy prioritizes addressing social or environmental problems in addition to generating financial return as an investment goal and measuring your progress toward that goal.

We are also seeing a backlash against ESG in the United States that takes peoples’ eyes off the ball. Ultimately, we need to make sure we have an economy that is operating in a clean, sustainable way; a system that works for investors; and, ultimately, an economy that works for people and the planet. ESG, DEI and impact investing will continue to play a role in that future.

Impact investors must have an intention to make a positive impact on the world on specific issues like, for example, sustainable agriculture, financial inclusion, clean energy, affordable housing, racial equity and beyond. Our goal is for investors to translate those good intentions into real impact through standardized metrics and benchmarks. This is incredibly valuable because it focuses investors beyond intentions and goals to operational metrics and performance. We want investors to look beyond the “old ways” of doing business and use impact performance benchmarks that drive a “race to the top” when it comes to realizing results for people on our planet.

What evidence exists to prove that over time, aligned investing creates either superior or dilutive financial returns?

This question comes up quite frequently — which is natural and understandable, as there are many misconceptions out there. There are qualitative and quantitative data points derived from surveys to understand if impact investors achieve both their financial and impact goals. In fact, our research has shown that about 90% of impact investors say they are meeting or exceeding the financial return objectives. These findings, as well as the growing demand from the retail market for impactful investment options, have opened the market to a broader set of mainstream investors who have adopted impact-investing strategies, committed large amounts of capital, and put their reputation and brand on the line. We’ve also found that many family offices are extremely interested in impact investing and are launching their own impact strategies as well.

What is your longer-term hope for impact investing and the importance of measurement in the field?

Our vision for impact investing is that it becomes integrated into all types of investments and asset classes. One day, we see all investors looking to ramp up the positive impact of their investments and manage their negative impacts. If we’re able to do that, we’ll transform the world and create an economy that works for all people. An economy that helps create products, housing, food, health and beyond that serves our lowest-income populations in addition to supporting high-quality jobs that allow families to live with dignity. To do this, the IRIS+ metrics need to become widespread and built into the way investors think beyond financial profit, where values drive economies and we deliver for our communities and the world more broadly.

Interview by Phillip W. Fisher, founder of Mission Throttle in suburban Detroit, an organization dedicated to accelerating philanthropic innovation in communities; and Douglas Bitonti Stewart, executive director of the Max M. & Marjorie S. Fisher Foundation, also in suburban Detroit, whose mission is to enrich humanity by strengthening and empowering children and families in need.


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