Closed-end private real estate debt funds raised $20bn (€16.9bn) last year, according to Preqin.
The amount raised is a 30% increase on the previous year. Preqin estimated that 26 debt funds raised a combined $20bn, up from 29 funds raising $16bn in 2013.
“The debt fund market has seen significant growth in recent years,” said Andrew Moylan, head of real assets products at Preqin. ”While the availability of bank financing for real estate investments has substantially improved in recent years, there remains demand for alternative lenders.”
The “strong fundraising for real estate debt funds”, Moylan added, suggests there is still ”significant institutional demand” for exposure to real estate debt investment.
Aggregate capital raised across all real estate strategies worldwide reached $90bn, just below the $92bn raised in 2013. Preqin said the figure is expected to increase by around 10% to 20% as more information is gathered.
The total number of funds that reached a final close has, however, seen a notable drop-off, Preqin noted, with 177 holding a final close in 2014 compared to 239 in 2013. Capital, Preqin said, is more concentrated among a handful of larger players.
The average real estate fund size reached its highest level ever, at $528m, compared to $417m in 2013.
Almost half (48%) of funds closed in 2014 exceeded their target size, compared to 44% of funds that closed in 2013.
Funds focusing on Europe raised 131% more capital in 2014 than in 2013, Preqin said, with $36bn raised compared to $15bn.
At the same time, North America-focused fundraising witnessed a ”notable decline”, with $44bn raised in 2014, compared to $63bn in 2013.
Last year saw Blackstone Real Estate Partners Asia raise $5bn, the largest Asia-focused fund ever.
Blackstone was also behind the largest global fund raise last year, with its Real Estate Partners Europe IV fund closed at €6.6bn in March.
”Across the entire real estate fundraising market, it is evident that investors are still putting considerable sums of capital to work across the asset class,” Moylan added. ”The number of funds receiving capital has taken a notable drop, however, as investors seek out the more experienced managers with long track records.
”Fundraising is expected to remain highly competitive, with the investor base becoming more selective about the managers they choose to invest with.”