Private fund managers have more than $2tn (£1.6tn) in capital ready to deploy for the first time, with more than $300bn targeting real estate, according to Preqin.
Total available capital – or dry powder – reached a high of $2.1tn in June 2018 and the amount targeting real estate similarly hit a record high of $322.6bn.
Although the amount of private capital seeking real estate opportunities has shot up from just $129bn in 2006, fund managers have barely budged on their allocations to the asset class. Real estate makes up 15% of private fund managers’ allocations globally, in line with the last 12 years when allocations have ranged from 14% to 17%.
By contrast, fund managers appear to once again be concentrating on private equity, which now accounts for 58% of all available capital – the highest proportion since 2012.
Richard Stus, head of private capital research at Preqin, said: “Deal activity is up in most asset classes, and the ratio of available capital to called-up capital is flat or falling – in essence, although dry powder is climbing, the rate of spending is climbing faster.
“In this context, burgeoning dry powder can be taken as a sign of an expanding and diversifying industry rather than one unable to put capital to work.”
Geographically, most available capital (55%) is focused on North America. While the percentage of capital targeting Europe has fallen from 25% to 23% since 2006, the percentage targeting Asia has doubled from 9% to 18%.
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