Real estate fundraising dropped to $66.8bn (€64bn) in the first half of 2023, compared to $159.5bn in the same period of 2022, according to PitchBook’s H1 2023 Global Real Estate Report.
So far this year, 87 funds have raised capital for real estate, compared to 476 funds last year.
“In fact, Q1 2023 closed on only $11.8bn total, the lowest quarterly figure since Q3 2009,” the report from the financial data and research firm said.
“While Q2 2023 closed on $55.1bn, 55.2% of this total can be attributed to just one fund, Blackstone Real Estate Partners X, which secured the title for the largest closed-end private real estate fund ever raised after closing on $30.4bn,” it said.
The next largest fund, NREP Nordic Strategies Fund V, closed on $4bn, demonstrating the large gap in fund sizes even among the biggest funds that had closed so far this year.
PitchBook said while fundraising appeared to have slowed, more than 20 funds opened within the past two years that were targeting more than $1bn—some of the largest vehicles belong to players such as Blackstone, Lone Star, and Blue Owl.
The firm noted that should some of these funds close within the next couple of quarters, it is possible that private real estate fundraising might return to historical levels.
As of December 2022, there is $427.8bn of dry powder to use toward private real estate investments, an 8.8% decrease from the $469.1bn that was available in 2021.
However, it was too early to tell whether 2023 fundraising numbers will replenish dry powder levels going forward given the challenges facing private real estate and commercial real estate as a whole.
With regards to strategy, according to the report, opportunistic funds garnered the lion’s share of fundraising at 60.6% of total capital.
Core and core-plus strategies, on the other hand, raised just $1bn, or 1.6% of capital overall.
“This is a considerable drop from 2022, when the strategies garnered $15.4bn, representing 9.6% of $71.8bn worth of US properties that have reached distressed level,” the report said.
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