As a family office, we know how important a diversified and sustainable asset allocation is. ETFs and equities are generally obvious options - real estate is also a fundamental component of a balanced asset strategy. In an appropriate portfolio, they can not only contribute to a lucrative return, they can also reduce the volatility of the portfolio and protect against inflation. We make a fundamental distinction between direct and indirect real estate investments.

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Direct investments

We define direct real estate investments as the independent acquisition of one or more properties. This can be financed 100% from equity or realized with the help of appropriate debt financing options, such as mortgages.

Examples of direct real estate investments:

- Detached house

- Apartment building

- Condominium

- Commercial property (office, retail, logistics)

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Direct real estate investments are not suitable for every investor. A successful commitment with direct investments requires sufficient equity for attractive property sizes and appropriate risk diversification.

In the case of direct investments, we observe that many clients do not know the market value of their properties, as the market is very opaque and the necessary expertise is lacking. Owners often underestimate the market value or the potential of their properties and therefore do not get the most out of their portfolio. Another hurdle: many customers do not have access to attractive investment properties and market participants such as property managers, financing partners or tradespeople.

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Indirect investments

As part of the indirect real estate investments we offer, the investor participates in a large number of properties via a separate legal entity (e.g. via a fund). Investors do not become owners themselves, but participate in the performance of the properties. This leads to a broad diversification of the real estate portfolio.

A distinction is made between closed-end and open-end real estate funds as well as real estate REITs and shares.

In the area of indirect investments, it can also be difficult for inexperienced investors to select the right managers and funds from the wide range on offer. For example, many investors lack access to exclusive institutional real estate funds due to a lack of network and high minimum investment volumes.

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The good sides and the challenges

The performance of real estate investments is less dependent on general stock market and interest rate trends than is the case with other product classes. In some cases, the performance can be positive even if the stock markets are trending sideways or downwards. The addition of real estate investments can therefore reduce the dependency of the investments on certain market developments.

Real estate investments can also provide protection against inflation, as rental income is largely indexed

Nevertheless, we also see some pitfalls that customers often encounter when investing in real estate. These start with the investment decision. Where should the investment be made? What types of use make sense? Particularly in the ongoing low interest rate environment, a historically high price level has become established in the real estate segment, which represents an additional barrier to entry.

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Not without a good advisor

Without a strong partner who has the relevant expertise and the right network, real estate investments are complex and involve risks. As advanced Family Office , we support our clients in two ways: firstly through our expertise in real estate investments - whether direct or indirect - and secondly through the use of modern, digital tools. Basically, we support our clients throughout the entire life cycle of their investments - from strategic advice to the acquisition, management and sale of direct investments and real estate funds

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