APAC family offices have been increasing their cash holdings and are looking to real estate as the most likely place for deployment of their capital
Real estate is the asset class that most family offices in the Asia-Pacific region expect to increase their allocation to compared to other asset classes.
Asked which asset class they intended to invest in in the future, and 39 per cent of respondents indicated that they would increase their involvement in the asset class, although 11 per cent of family offices indicated to reduce their allocation to real estate.
These were among the findings of the Asia-Pacific Family Office Report 2023, a survey published by Raffles Family Office and Campden Wealth today.
The survey was based on responses from 76 single family offices and private (not commercial) multi-family offices in Asia-Pacific. The survey was conducted between April and September 2023.
The responses showed that in 2022 Asia-Pacific family offices increased their allocation to real estate by four per cent compared to the end of 2021. Cash and equivalents also saw an increase of four per cent over the same period.
“Family offices have intentionally bolstered their cash positions to capitalise on market opportunities,” the authors said. “The key questions now are how and when this capital might be reinvested.”
One prominent characteristic of family office investments in recent years has been the steadily growing allocation to private markets. This has occurred to such an extent that this now constitutes the second-largest asset class
The authors also found that there had been a significant reduction in exposure to developed market equities in Asia-Pacific family office portfolios – from 22 per cent at the end of 2021 to 17 per cent at the end of 2022 – although this could partly be the result of lower valuations caused by market drawdowns, rather than intended portfolio decisions.
Looking over a longer timeframe, the authors observed that private markets have become an increasingly important part of portfolios.
“One prominent characteristic of family office investments in recent years has been the steadily growing allocation to private markets,” the authors of the report wrote. “This has occurred to such an extent that this now constitutes the second-largest asset class.
“When combined, private equity, venture capital and private debt comprise 26 per cent of the average Asia-Pacific family office portfolio, nearly in line with the global average of 27 per cent,” they said.
The report also found that 58 per cent of Asia-Pacific family offices have reported an increase in assets under management, with 32 per cent having experienced a growth of more than 10 per cent. This was largely due to asset allocation decisions made in recent years to counter the impact of inflation and rising rates, including shortening the duration of fixed-income bond portfolios, reducing borrowings and increasing exposure to equities.
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