After two years of steady declines, and a slight jump up last year, private real estate fundraising saw a precipitous drop in 2023, according to PERE’s Q1 2023 fundraising report.
Fundraising activity peaked in Q1 2019, when a total of $61.2 billion was raised during the quarter. By Q1 2021, the total had fallen to $44.7 billion before jumping back up last year to $55.2 in Q1. This year, the amount of capital raised in Q1 sank to $12.4 billion, which is not just the lowest since the market’s peak, but the smallest amount of capital in an opening quarter since PERE began tracking data in 2008.
The number of funds closed also has tumbled in recent years. In 2021, 466 funds reached a final close, while only 362 did so last year, the lowest full-year number of funds closed since 2011. However, 2023 is on track to see even fewer completed capital raises, with only 33 funds closed in Q1, easily the lowest number PERE has tracked in a single quarter. The number of fund closes has never fallen below 250 during the 15-year tracking period.
Blackstone closed its record setting $30.4 billion Blackstone Real Estate Partners X fund after the end of Q1. But had the close happened during the first quarter, the fundraising amount would have been at a similar level to Q1 totals in recent years. The addition of one vehicle would not have moved the needle on the paltry number of funds closed, however.
Among funds that have closed, value-add and debt strategies are the most prevalent, reflecting the need to reposition steadily increasing numbers of obsolete assets as well as the dislocation in the debt markets. North America remains the most popular target region, representing 80 percent of the capital raised in funds closed in Q1.
Check out our interactive report for a more extensive analysis of Q1 2023’s fundraising figures, including the most popular strategies and the largest funds in market.