Capital concentration in the private real estate fund sector has reached unprecedented levels, with just five managers responsible for the 20 largest funds closed in the past 10 years, a new report reveals.
Alternatives data firm Preqin said that, in the past decade, the 100 largest private real estate fund managers had collectively secured 62% of all fundraising for the asset class.
Oliver Senchal, head of real estate products at Preqin, said: “With private real estate industry seeing increased concentration of capital at the top end of the market, the influence of the top 100 real estate fund managers has never been greater.”
Collectively, these fund managers accounted for two-thirds of fundraising over the past decade, he said.
Because of this, Senchal said, these firms were able to influence the fundraising and deal activity of the market to a large degree.
Preqin’s report also revealed the extent of US domination of the global private real estate investment management market.
Only three of the top 20 real estate fund managers – in terms of capital raised in the past 10 years – are headquartered outside the US.
As a whole, investors were satisfied with the performance of private real estate over recent years, Senchal said.
“However, they have reported concern over certain challenges, namely valuations and deal flow, which has only solidified their faith in the networks and consequently the deal sourcing capabilities of the largest and most successful firms,” he said.
The top 100 private real estate fund managers have raised $710bn (€591bn) overall — 62% of total fund industry raising in the period — and have an estimated $161bn in dry powder, Preqin said.
Some 68 of those top 100 managers are based in North America, 20 are based in Europe and nine are based in Asia.
Blackstone is by far the largest fund manager, having raised $83.1bn alone since 2007, and holds $22bn in dry powder, according to the report.