In 2025, family offices are navigating economic uncertainty, geopolitical risks, and muted private equity exits by reallocating toward real estate for stability and income, while selectively maintaining exposure to high-conviction alternatives like private credit and infrastructure. Amid slower PE distributions and higher financing costs, many are pulling back from broad private equity commitments—planning reductions from 21% to 18% of portfolios per UBS—yet alternatives overall remain robust at 42-48% of assets (Goldman Sachs, BlackRock, BNY Mellon). Real estate emerges as a standout, with PwC reporting it at 39% of deal allocations in H1 2025 (up from 26% in 2023), driven by opportunistic buys in apartments, land development, and unlisted properties.
The Pivot to Real Estate
Family offices view real estate as a hedge against volatility, offering reliable cash flow, inflation protection, and tangible assets. bfinance data shows 33% increasing unlisted real estate exposure in 2025, anticipating moderate-to-significant valuation recoveries (>60% expect 5-10%+ gains). Goldman Sachs notes private real estate & infrastructure allocations rising to 11% (from 9% in 2023), with nearly half investing directly for operational control.This shift reflects contrarian timing: capitalizing on market dislocations while leveraging patient capital for long-term projects like urbanization and redevelopment.
Select Alternatives: Private Credit and Beyond
Within alternatives, selectivity reigns. Private credit is surging—allocations doubling in some surveys—as investors seek yield and downside protection amid elevated rates. BlackRock reports over half bullish on private credit and infrastructure, with ~30% planning increases. Venture capital holds steady at ~31% of startup funding (PwC), focused on thematic plays like AI, but broad PE faces headwinds from delayed exits.Direct and co-investments dominate, allowing fee efficiency and alignment without full fund exposure.
Key Takeaways for Fund Managers and Entrepreneurs
- Real estate now ~39% of family office deals in 2025 (PwC), prioritizing stability over growth-at-all-costs.
- Alternatives ~42-48% of portfolios, with shifts to private credit/infrastructure and away from traditional PE.
- Opportunities arise in co-invests and directs—emphasize yield, resilience, and long-term fit amid uncertainty.
This rebalancing underscores family offices’ evergreen advantage: prioritizing preservation and selective growth in a fragmented market, making them resilient partners for ventures aligned with enduring themes.