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Laxman Pai, Opalesque Asia:

Investors seeking real estate's steady cash flows poured more capital into the sector, driving the total amount of private real estate funds raised to $151bn, an all-time high.

According to a report by Preqin, the increase in dry powder- along with a 5.3% rise in unrealized value - boosted assets under management (AUM) to a record of $992bn as of June 2019, marking the fourth consecutive year of AUM growth for the industry.

However, there are some cautionary indicators. First, fewer vehicles reached a final close in 2019. The number that did close fell to 295, the lowest total in a decade; in 2009, during the Global Financial Crisis (GFC), just 229 funds closed.

10 largest funds raised 44% of total capital

Second, capital consolidation in the industry deepened. Forty-four percent of the total capital raised was amassed by the 10 largest funds. Just two of those funds dominated the entire fundraising landscape: Blackstone Real Estate Partners IX, which secured $20.5bn to become the largest private real estate fund ever closed, and Brookfield Strategic Real Estate Partners III, which hoovered up $15bn to become the third-largest such fund.

Third, deal volume and value fell amid concerns over rising valuations. "Three-quarters of real estate fund managers we surveyed in November 2019 said that asset prices were higher than they were 12 months ago, and rather than pay too much for targets they perceived to be overvalued......................

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