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Alternative Market Briefing

Fundraising for real estate funds more competitive as record 1,088 funds seek $338bn in commitments

Wednesday, April 21, 2021

Laxman Pai, Opalesque Asia:

The number of real estate funds reaching final close more than halved to 52 securing 25% less capital than in Q1 2020. Real estate funds raised $25bn in Q1 2021 through 52 closed funds, said a report by Preqin.

"The fundraising environment is becoming more competitive. There is a record 1,088 funds in the market seeking $338bn in commitments from global investors," said the Q1 2021 Real Estate Quarterly Update by Preqin.

However, larger funds are closing in the first quarter supporting the ongoing trend of capital consolidation into the largest fund managers globally. This is understandable given the significant uncertainty now facing key real estate segments like retail and office.

During Q1 2020, 1480 deals were completed with an aggregate value of $44bn. Down 24% and 44%respectively compared to Q1 2020, it pointed out.

According to the report, 58% of investors expect to commit less than $50mn of fresh capital to funds over the next 12 months.

"Going forward fund managers are well-positioned with ample firepower to capitalize on opportunities in an eventual recovery," it said.

Meanwhile, assets under management (AUM) stood at a record $1.1tn as of September 2020 and secondaries funds comprise an all-time high (2.7%) of the total.

David Lowery, Real Estate Spokesperson at Preqin said: "The real estate asset class is still suffering from the effects of the pandemic. The number of funds closed is down in Q......................

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