Family offices could double in number by 2030, with property accounting for over 50 per cent of assets under management
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The growing complexity of wealth management and the need to ensure the preservation and growth of wealth across generations are driving the evolution of family offices in Portugal. The Havos Investment Pulse suggests that the number of such structures could rise from around 250 to 500 by 2030. In an interview with Diário Imobiliário, Pedro Barros Rolo, CEO and Partner at Havos, analyses the factors underpinning this trend, the significance of property within family portfolios, and the opportunities and challenges facing these investors in an increasingly demanding market.
The growth of family offices is linked to the increasing professionalisation of the management of large family fortunes. As the nature of the various types of assets becomes more complex, there is a growing need to structure organisations in such a way that investment decisions are made on a more informed basis and are monitored to ensure a long-term perspective.
In Portugal, this trend is part of a wider transformation in private investment. The Family Office is no longer merely a structure for overseeing the family business; it is now taking on a more wealth-management and strategic role in the management and allocation of family capital.
Our forecast of a possible doubling by 2030 should therefore be understood not merely as an increase in the number of structures, but as a sign of the growing sophistication of private capital in Portugal.
Is Portugal actually seeing an increase in the number of large family fortunes, or are we primarily witnessing a greater degree of professionalisation and formalisation of structures that already existed?
As mentioned earlier, the trend we have identified is, above all, towards greater professionalisation and organisation in wealth management.
Not all growth in the number of family offices necessarily means that new large fortunes are emerging. In some cases, we are dealing with families who already had wealth and management structures in place, but who are now organising that management in a more professional and specialised manner across other areas of investment, including property.
It is a significant change because it alters the way decisions are made: there is greater focus on diversification, risk, succession and the preservation of wealth across generations.
It is a diverse sector, and there is no single profile for a Family Office in Portugal. What we have identified as a trend is a growing sophistication in their needs, as well as in their areas of activity and interest.
Management is gradually shifting away from a focus solely on the preservation of specific assets and is coming to encompass a more integrated view of assets, investment opportunities and the identification and mitigation of risks.
We therefore believe that greater attention should also be paid to structuring decisions with a long-term perspective, particularly in a context where intergenerational succession and the diversification of assets are becoming increasingly important.
Havos specialises in the property management of family offices’ assets and portfolios. This is where our expertise lies and where we clearly stand out from other property consultancy firms.
Generational succession is cited as one of the issues that is gaining in importance. How is the transfer of wealth between generations changing families’ investment strategies?
Succession requires us to consider the preservation and growth of assets beyond a single generation.
This highlights the need to tailor investment strategies for different asset classes to objectives and profiles suited to each family business.
It is precisely here that the professionalisation of the property sector is becoming increasingly important in building a property portfolio with diverse characteristics, focusing on:
– property asset profile;
– over the time horizon;
– in terms of liquidity and risk
What we have observed is that property continues to play a significant role in private investment and that real, tangible assets remain of considerable importance to investors with a long-term perspective.
The appeal of property lies in the possibility of combining the preservation of assets, the generation of income and the creation of value over time. For a family thinking in terms of several generations, this long-term perspective can be particularly relevant.
Based on our experience, and on indicators gathered at international level, the average proportion of property within the assets under management of Portuguese family offices – and here it is important to distinguish between assets under management and total wealth – is estimated to be equal to or greater than 50 per cent of that figure.
Diversification is a natural trend as family offices become more professional. The aim is increasingly to build a balanced wealth management strategy and not to rely excessively on a single asset class.
More important than identifying a winning asset class is realising that these structures are taking a more integrated view of wealth – treating it as an asset class that accounts for a very significant proportion of total net worth – whilst assessing different opportunities with profiles suited to each family business.
We must take a comprehensive view of the property portfolio. Factors such as (1) the type of property (logistics, residential, services, retail, etc.), (2) location (macro and micro, external and internal) and (3) the projects’ economic indicators (associated margins and returns, such as IRR and yields) will determine the strategy and composition of the portfolio.
There is a convergence, particularly in terms of the sophistication and rigour of the decision-making process.
Family offices are gradually adopting a more structured approach to investment, with greater emphasis on diversification, risk management and the investment horizon.
This does not mean that they come to adopt exactly the same approach as institutional investors. They retain their own distinctive characteristics, notably a stronger commitment to the preservation and continuity of the family’s assets.
Family offices can play a significant role as a source of private capital with the capacity to operate over longer investment horizons.
In the property sector, this characteristic can be particularly important in projects that require time, the ability to deliver, and a vision that goes beyond the logic of a short-term transaction.
The impact will, of course, depend on the strategies of each organisation and the opportunities they encounter in the market. However, as the number and sophistication of these investors increase, their influence on the Portuguese investment ecosystem is also expected to grow.
The current climate and circumstances also place greater demands on the management of these structures. Succession, diversification, risk management and access to investment opportunities are challenges that require ever-greater analytical and decision-making capabilities.
In the case of Portugal, there is also a need to ensure that the market is able to provide the conditions for long-term capital to find investment opportunities that are of high quality and can be effectively implemented, as well as within a context of political and, necessarily, fiscal stability.
For a Family Office, it is not enough simply to identify an attractive asset. It is necessary to understand the strategy, the risk, the investment horizon and the ability to turn that opportunity into value. And in this regard, the issue of stability, in all its aspects (social, political and fiscal), takes on particular significance.
If this trend materialises, we will see a significant increase in the scale and sophistication of private investment in Portugal, alongside the consolidation of this type of structure.
More family offices do not necessarily mean more global capital, but potentially more structured and more professionalised capital.
In the property sector, this could lead to more stringent criteria for the selection of assets and projects, and to growing demand for opportunities capable of generating value in a sustainable manner.
“Ultimately, the most important factor regarding the number of family offices will be the availability and quality of the capital that these structures represent, and the impact they will have on the Portuguese economy and property market.”
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