Why High-Net-Worth Individuals Invest in Real Estate
In times of economic uncertainty, even high-net-worth individuals invest in real estate, given the low volatility associated with property investments and the consistent appreciation these assets offer. According to data from the Real Estate Market Outlook report published by CBRE, real estate investment grew by 20% in 2024 and shows positive prospects for 2025, a trend supported by foreign demand and falling interest rates, both key to overcoming the instability caused by recent political events.
Why Do Millionaires Invest in Real Estate?
Interest in real estate assets among the wealthy has steadily increased, becoming a significant phenomenon as real estate distinguishes itself from other assets by offering attractive investment opportunities, profitability, and adaptability, making it an appealing option in a volatile macroeconomic environment.
In this context, Borja Ortega, Partner at Diaphanum’s Real Estate Division, highlights how trust and profitability continue to demonstrate the value of real estate: “Real estate has become a sector to seriously consider within the spectrum of market opportunities. Alongside purely financial investments, private equity, and others, the real estate sector, despite a certain degree of illiquidity, offers a greater environment of security and stability than its competitors.”
Thus, real estate enables the search for refuge in tangible assets that help preserve and grow wealth, while also allowing portfolio diversification through residential, retail, or industrial properties. Moreover, real estate assets are generally resistant to inflation, maintaining or even increasing in value over short to medium timeframes.
“We live in a world of great instability. Investments are influenced by elements that were once purely economic, like tariff policies, as well as external factors such as health crises or armed conflicts. In this context, medium-term real estate investment, when acquired with professional advice and considering future liquidity, is always positive,” explains the Diaphanum expert.
Are High-Net-Worth Individuals Investing in Real Estate?
There are numerous products that wealthy individuals choose from to diversify their assets within the real estate sector:
– Real Estate Properties. Direct property investment aims to generate profits through asset appreciation or periodic income. According to data from Fotocasa, Spain achieved an average residential rental yield of 6.7% in 2024, showcasing the sector’s potential.
– REITs (SOCIMIs in Spain). This option is one of the most popular among high-net-worth individuals, allowing them to obtain attractive returns without directly acquiring properties or engaging in complex processes.
– Investing in Real Estate Funds. These funds allow for diversification and increased return potential without the need for direct asset management. However, they typically require higher minimum capital investments — usually between €10,000 and €50,000 — making them less accessible to individual investors.
– Alternative Products like Real Estate Crowdfunding. Crowdfunding platforms such as Urbanitae are an example of investment and financing service providers that allow any investor to access opportunities in the real estate sector, whether with small or large amounts.
Likewise, locations have gained importance, concentrating real estate investment attractiveness in cities with the highest demand. Madrid has overtaken Paris to claim second place in CBRE’s ranking of the most attractive cities for investors, while Barcelona ranks fourth. Both cities reflect the boom and potential of major urban areas in the European real estate market. Meanwhile, interest in Spanish real estate has also expanded to other cities, with Valencia and Granada gaining relevance in the retail and hospitality sectors, offering new investment opportunities.
Advisory Services Are Key
Leveraging the potential of these types of investments is another step in a strategy orchestrated by family offices to optimize the protection and growth of wealth, positioning real estate as a key asset for this segment. To succeed in this type of investment and generate value, high-net-worth individuals follow a process that involves analyzing and selecting locations, diversifying their portfolios, adopting a long-term view, seeking professional advice, and keeping liquidity considerations in mind.
Regarding this, Borja Ortega notes, “Interestingly, even assets that aren’t immediately liquid, such as real estate, need to maintain that characteristic. Therefore, it is crucial to consider factors like location, tenant solvency, whether the property is leased, and the purchasing demand when investing for resale or rental purposes.”
Urbanitae: How High-Net-Worth Individuals Can Invest in Real Estate
Wealth is the division of the real estate crowdfunding platform dedicated to high-net-worth individuals, allowing them to add the best off-market investment opportunities across Europe to their portfolios in value-added projects ranging from €3 million to €25 million.
The advantages of this model are numerous:
– Favorable Tax Treatment. In equity projects, legal entities — companies, family offices, etc. — with a participation of 5% or more are exempt from paying corporate tax on profits. Thus, the financial-tax return can be up to 30% higher than that of purely financial investments.
– Store of Value. The primary value lies in the acquired land, which tends to appreciate over time.
– Double-Digit Returns. Urbanitae invests in non-leveraged real estate developments, a business where margins range between 15% and 20% annually, with relatively short timeframes: 2–3 years.
– Off-Market Assets. Through Urbanitae Wealth, investors gain access to exclusive projects available only on the platform.
Regarding real estate crowdfunding, Ortega points out that it is “undoubtedly a very attractive new investment avenue. It stems from the transformation and growing professionalization of the real estate market over recent years, along with the large-scale introduction of technology. It offers alternative financing to developers and attractive returns to investors, but one must always perform due diligence, prioritize security, and carefully analyze the counterparty. We also believe it is the first building block for a market that will evolve toward larger-scale investments combining real estate and technology, such as the tokenization of assets.”
