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Alternative Market Briefing

Private real estate fundraising nosedives in 2Q 2019, hitting a five-year low

Thursday, July 11, 2019

Laxman Pai, Opalesque Asia:

Private real estate fundraising decreased significantly in Q2 2019 from the previous quarter, hitting a five-year low, Preqin said in its quarterly update on real estate.

Forty-seven funds reached a final close, raising just $29bn, which marks a sharp decrease from the $46bn secured in the previous quarter. The quarter is also some way off the equivalent period of 2018, which saw 115 funds raise a combined $38bn.

As is typical, value-added and opportunistic funds accounted for the greatest proportion of fund closures, with 16 and 15 vehicles closed respectively.

Debt funds secured notable fundraising, though, as nine funds raised a total of $8.9bn. Core and core-plus fundraising remained peripheral, collectively securing just $0.9bn through the quarter. In contrast to Q1, no distressed real estate funds closed.

The time spent in market by funds closed in the first half of the year points to a bifurcation of the fundraising market. Continuing the long-term trend, a greater proportion of funds closed in H1 (40%) spent less than 12 months in market compared to 2018 (38%).

At the same time, the proportion in market for more than 18 months rose from 36% to 38%, showing that a significant proportion of fund managers still face a long and challenging fundraising process.

Large number of new private real estate funds enter market

Despite lacklustre top-level fundraising figures, a large number of new private re......................

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