Global real estate funds have returned more than $100bn (£80bn) to investors every year since 2013, Preqin’s latest Global Real Estate Report shows.
Fund managers distributed $128bn in the first half of 2016 alone after returning a record $212bn in 2015. More than $600bn has been returned to investors since 2013.
Total assets under management peaked at $808bn at the end of 2015 and fell to $795bn by June 2016.
The study also showed a record high 525 private real estate funds in the market as of January 2017, targeting $177bn. Some $108bn was raised by 225 funds closed in 2016.
Andrew Moylan, head of real estate products at Preqin, said a fall in total assets under management was not necessarily negative because it showed cash going back to investors.
He said: “The year ahead does present many challenges, and we may see the market having to adapt.
“It is unlikely that real estate funds will be able to sustain this level of performance in the face of rising valuations and stiffer competition for deal opportunities.
“However, the industry remains capable of providing portfolio diversification, reliable income and uncorrelated returns for investors, and it is unlikely that they will become less committed to the asset class in the long term.”
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