Within the quarter, 48 funds closed in the quarter, which Preqin says continues the trend, albeit at a slower pace, of capital consolidation.
Together these funds raised $37 billion, at an average of $843 million per fund, Preqin data shows, although this is skewed by the monster $20.5 billion closing of Blackstone Real Estate Partners IX. Funds focused on North America once again dominated the market, with 28 funds accounting for 76% of aggregate capital raised.
Blackstone Real Estate Partners IX became the largest private real estate fund of all time in September. Following in the wake of Brookfield Strategic Real Estate Partners III’s $15 billion closure earlier in the year, the more experienced, blue-chip fund managers are successfully attracting the majority of capital commitments.
Preqin data for Q3 also showed:
- Investors continued to favour
value-added and opportunistic strategies:
- 20 and 12 such funds closed respectively.
- Among private real estate funds
closed so far in 2019, two-thirds have either achieved or surpassed their
- Fund managers are also completing these raises in less time, with 88% of funds closing inside 24 months, compared to 82% in 2018.
In its Q3 2019 Real Estate update, Preqin explains:
“With the threat of slowing economic growth and increasing political risk, the final quarter of 2019 is shrouded in uncertainty.
“Investors are still looking to put their money towards real estate, albeit in smaller quantities than this time last year, while fund managers continue to bring record numbers of funds to market. Blackstone raised the largest ever closed-end private real estate fund in Q3, while opportunistic fundraising is on track to reach its second-highest total.
“As the industry searches for stability, there has been an uptick in fundraising for lower-risk strategies, with core and core-plus funds already outpacing full-year 2018 fundraising. Notably, high levels of capital have been raised by a very small number of funds in Q3 – half the number closed in Q3 last year. Broadly, industry fundamentals appear strong, even as we approach the increasingly uncertain end of the year. Investor appetite for the asset class persists, and the dry powder is there, waiting to be spent on the right deals.”