Fundraising for closed-end private real estate funds hit a record high in 2019, surpassing $150bn (£115bn) for the first time.
In total, 295 funds reached a final close, raising a collective $151bn. Large funds dominated the market last year, and the average fund size in 2019 reached a record $625m, according to Preqin’s 2019 fundraising update.
Despite the significant amount of capital raised, the number of vehicles reaching a final close declined sharply.
As fundraising has hit new highs, dealmaking has stuttered. The year saw notable deal activity, with 9,300 deals announced worth a combined $410bn.
The record here came in 2018, when almost 9,800 deals were recorded with a total value of $457bn.
At the start of 2020, there are 918 real estate vehicles seeking a total of $281bn from investors.
Justin Hall, Preqin’s head of real estate, said: “Real estate fundraising hit a new high in 2019, surpassing the high-water mark of $148bn set in 2008. Concerns of a potential market slowdown have led investors to commit more capital to alternative assets, and real estate has benefited from a huge influx of capital in the past five years.
“But the steep decline in the number of funds closed shows how unevenly that capital is distributed – concentration among the largest fund managers is greater than ever, and the overall success of the market does not mean that first-time or smaller fund managers can expect to meet with easy success when they bring new vehicles to market in 2020.”
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