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Alternative Market Briefing

Private real estate funds raised $118bn in 2020 through 283 closed funds

Wednesday, February 10, 2021

Laxman Pai, Opalesque Asia:

Fundraising and deal-making in the private equity real estate industry decreased in 2020 due to the COVID-19 pandemic, said Preqin.

Real estate AUM reached $1.09tn as of June 2020 (the latest available data). This is an increase of more than 40% from five years ago and a 4.7% increase from the $1tn in AUM at the end of 2019.

Fundraising was hit by lockdowns - in 2020, 283 funds were closed securing $118bn, down from 494 funds closed and $179bn raised in 2019.

"After a record 2019, 2020 figures represent a 43% decrease in the number of funds closed and a 34% fall in aggregate capital raised," the report added.

The 10 largest funds secured 34% of the total capital raised in 2020, Preqin said.

During 2020, 5,979 deals were completed with an aggregate value of $221.6bn. Investors are still positive towards the real estate industry with 36% expecting to increase allocations in the next 12 months.

"Investors and fund managers expect to see a wide range of opportunities emerge during 2021. Deal volumes and values are likely to accelerate as a potential path out of the COVID pandemic is on the horizon, aiding increased site visits and deal team interactions," the report noted.

David Lowery, Head of Research Insights at Preqin said: "Restrictions on travel, lockdowns and reduced physical interaction among market participants hit fundraising and played a major part in deal declines. However, large funds continued......................

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