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Benedicte Gravrand, Opalesque Geneva: According to research house Preqin, emerging managers of private real estate funds have found the fundraising environment to be increasingly challenging in recent years. This is mainly because investors are demanding longer track records and experience.
Indeed, In the real estate fundraising market, fundraising has not yet returned to the pre-2007 levels, a year when 162 funds garnered $30bn, and has steadily declined since 2012.
Emerging managers, defined as first or second-time fund managers, have declined in prominence. According to Preqin, in 2011 they made up nearly half of all funds closed and 41% of all capital raised; in 2016 they accounted for 27% of funds closed and just 10% of capital raised. Established managers have also experienced trends towards fewer fund closures, but their aggregate capital has continued to rise, leading to a greater discrepancy in average fund size between the two groups. The spread between average size of funds raised by established managers and emerging managers was $204m in 2011 and $414m in 2016.
Source: Preqin
The research company also found that since 2011, all managers have raised higher-risk vehicles. More than half of established and emerging managers now employ either an opportunistic or value added strategy.
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