After levelling off in 2015, global real estate fundraising volume took a dive last year, according to new statistics from PERE.
In 2016, a total of $100.46 billion was raised from 183 funds, down considerably from the 2015 tally of $142.53 billion from 244 funds, the data said. The total number of funds closed in 2016 was the lowest in eight years, while the total capital raised was the lowest in five years.
Over an eight-year period, the years 2014 and 2015 can be seen as turning points in global real estate fundraising. 2015 was the year that the aggregate volume stopped rising and remained flat at approximately $142 billion. Capital raising totals had been climbing steadily during the previous four years, beginning in 2010, when fundraising volume clocked in a total of $62.91 billion from 188 funds. By 2013, the total equity haul had doubled to $127.82 billion.
Meanwhile, the number of funds closed have been falling since 2014, when the final close tally dropped to 294, after holding steady for two years at 316.
Broken down by region, fundraising volumes declined the most precipitously in North America in 2016, falling from $51.4 billion in 2015 to $31.1 billion. Total capital raised also dropped for global funds over the same period, from $42.7 billion to $35.7 billion, and European funds, from $33.5 billion to $18.9 billion. Total equity hauls remained relatively unchanged in Asia-Pacific and Latin America.
Broken down by strategy, fundraising totals also were more muted in 2016 compared with 2015. Opportunity funds raised only $34.4 billion, compared with $59.7 billion the previous year, while value-added and core-plus funds collected $19.9 billion and $15.1 billion, respectively, compared with $33.4 billion and $22.5 billion in 2015.
However, a few strategies saw an uptick in capital flows. Capital raised for mezzanine debt funds increased to $24.5 billion from $18.7 billion the previous year, while funds of funds and co-investment vehicles and secondaries funds saw modest increases in fundraising volumes over the past year.