The term family office (FO) is a hot buzzword in the financial services industry today
(Bowen Jr., 2004). As their wealth increases, families will at some point likely turn to
advisors to assist with the management and protection of their prosperity. These
professionals working under one roof are commonly referred to as family office
(Cestnick, 2011).
Like any business operating in the capital markets, family offices focus on the
achievement of superior performance and investment return maximization. Yet, in a
globalized world, markets have turned out to be fairly volatile during the past two
decades. In particular as a consequence of the 2008 financial crisis, markets have been
turbulent all around the world (Adair, Berry, Haran, Lloyd, & McGreal, 2009). Still
today, Europe - as an economic entity - appears to be sensible to the offshoots of the
financial and economic depression (Adair et. al., 2009).
During such times, the axiom for a family office may be contrasting: If only few
reputable investments turn out to be profitable, the primary objective rather has to be
the diversification and securitizing of assets and risks (Basel Committee on Banking
Supervision, 2011).
Hedging against inflation and economic disruptions, both gold and real estate, often
considered the classical alternative investments, have lately received increasing
attention by academic scholars and practitioners (Bond & Seiler, 1998; Enns, 1979;
Preston, 2011; Worthington & Pahlavani, 2007). Real estate, in particular, is
considered favorable by some as, unlike for gold, capital gains are not the sole source
of income and positive cashflows on income properties may be achieved on a
reoccurring basis (McKnight, 2010).
Inhaltsverzeichnis (Table of Contents)
- Introduction
- Problem Definition and Research Objectives
- Course of the Investigation
- Family Office Business
- Family Offices
- Scope of Services and Outsourcing Considerations
- Asset Allocation for Family Offices
- Synergy Considerations for Real Estate Investments
- Real Estate Investments by Family Offices
- General Real Estate Investment Strategies
- Real Estate Market Entry Challenges
- Geographical Diversification into Foreign Markets
- Macro Perspective - Real Estate and Other Economic Forces
- Micro Perspective - Market Particularities
- Case Studies
- Outsourcing Opportunities at Ernst & Young LLP
- Club Deal Structure at Taurus Investment Holdings, LLC
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This paper analyzes the decision-making process of family offices regarding real estate investments in foreign markets, focusing on the choice between insourcing and outsourcing these activities. It explores the challenges and opportunities presented by global markets, particularly in light of recent economic volatility.
- Insourcing versus outsourcing of real estate investments by family offices.
- Risk management and diversification strategies in a globalized context.
- The role of real estate as an asset class for family offices.
- Challenges of entering foreign real estate markets.
- Case studies illustrating different approaches to managing real estate investments.
Zusammenfassung der Kapitel (Chapter Summaries)
Introduction: This introductory chapter sets the stage by defining family offices (FOs) within the financial services industry and highlighting the increasing importance of their role in managing and protecting family wealth. The chapter emphasizes the challenges posed by volatile global markets, particularly in the aftermath of the 2008 financial crisis, and underscores the need for diversification and risk management strategies, with a focus on alternative investments such as real estate.
Family Office Business: This chapter delves into the core functions and operations of family offices, examining their scope of services and the key considerations involved in outsourcing various functions. It explores the asset allocation strategies commonly employed by family offices and the potential synergies between family office operations and real estate investments. The discussion lays the foundation for understanding the context in which the decision to insource or outsource real estate investment management is made.
Real Estate Investments by Family Offices: This section offers a detailed examination of real estate investment strategies employed by family offices. It explores general investment approaches, the inherent challenges of entering foreign real estate markets (considering both macro and micro perspectives), and the benefits of geographical diversification. The chapter analyzes the economic forces at play in influencing these investment decisions, highlighting the complexities of international real estate markets.
Case Studies: This chapter presents two case studies illustrating different approaches to managing real estate investments within the family office context. One example focuses on outsourcing opportunities through partnerships with firms like Ernst & Young LLP, demonstrating a strategic approach to leveraging external expertise. The other case study explores the use of club deal structures employed by Taurus Investment Holdings, LLC, showcasing a different collaborative investment model. These contrasting approaches highlight the diverse strategies available to family offices seeking to manage their real estate holdings.
Schlüsselwörter (Keywords)
Family office, real estate investment, outsourcing, insourcing, risk management, diversification, asset allocation, foreign markets, global investment, case studies, Ernst & Young, Taurus Investment Holdings.
Frequently Asked Questions: Family Office Real Estate Investment Strategies
What is the main topic of this document?
This document analyzes the decision-making processes of family offices regarding real estate investments in foreign markets. It focuses on the choice between insourcing and outsourcing these activities, exploring the challenges and opportunities presented by global markets, particularly considering recent economic volatility.
What are the key themes explored in the document?
Key themes include insourcing versus outsourcing of real estate investments by family offices, risk management and diversification strategies in a globalized context, the role of real estate as an asset class for family offices, challenges of entering foreign real estate markets, and case studies illustrating different approaches to managing real estate investments.
What is covered in the Introduction chapter?
The introduction defines family offices and their increasing importance in wealth management. It highlights the challenges of volatile global markets and the need for diversification and risk management strategies, focusing on alternative investments like real estate.
What does the chapter on "Family Office Business" discuss?
This chapter delves into the core functions and operations of family offices, examining their service scope and outsourcing considerations. It explores asset allocation strategies and potential synergies between family office operations and real estate investments.
What are the main points covered in the "Real Estate Investments by Family Offices" chapter?
This chapter examines real estate investment strategies used by family offices, including general approaches, challenges of entering foreign markets (from macro and micro perspectives), and the benefits of geographical diversification. It analyzes economic forces influencing these investment decisions.
What kind of case studies are included?
The case studies illustrate different approaches to managing real estate investments. One focuses on outsourcing opportunities through partnerships (e.g., Ernst & Young LLP), and the other explores club deal structures (e.g., Taurus Investment Holdings, LLC), showcasing diverse strategies for managing real estate holdings.
What are the key takeaways from the case studies?
The case studies highlight the diverse strategies available to family offices for managing real estate investments, demonstrating the benefits of both leveraging external expertise through outsourcing and employing collaborative investment models like club deals.
What are the key words associated with this document?
Key words include: Family office, real estate investment, outsourcing, insourcing, risk management, diversification, asset allocation, foreign markets, global investment, case studies, Ernst & Young, Taurus Investment Holdings.
What is the overall structure of the document?
The document is structured with an introduction, a section on the family office business, a section on real estate investments by family offices, and a concluding section presenting case studies. It also includes a table of contents, objectives and key themes, and chapter summaries.
Who would benefit from reading this document?
This document would be beneficial for academics, researchers, and professionals in the fields of finance, real estate, and family office management who are interested in learning about real estate investment strategies employed by family offices, particularly those involving foreign markets and outsourcing decisions.
- Quote paper
- Florian Manz (Author), 2013, Structuring the Family Office. Insourcing versus Outsourcing Decisions for Real Estate Investments into Foreign Markets, Munich, GRIN Verlag, https://www.grin.com/document/294248
