PERE records strongest Q1 fundraising since crisis

Global fundraising for private real estate ballooned by 57 percent year-on-year, thanks especially to the megafunds closed in Europe and the US.

Fundraising for private equity real estate firms recorded its strongest first quarter results since the onset of the global financial crisis, with a handful of particularly large funds closed in the US and Europe, according to PERE’s Research and Analytics division.

In total, 58 property funds held final closes in Q1 2014, hauling a total of $30.5 billion globally. That compares to the $20.7 billion raised across 73 real estate funds in Q1 2013, and only $12.9 billion raised for 48 funds in Q1 2012.

European and global funds made up the vast majority of the capital raised for last quarter, collecting $14.6 billion and $7.8 billion, respectively. The fundraising for Europe was more than Europe-focused funds collected for all of 2010 combined, which was only $8.4 billion. North American funds were not far behind, securing a total of $6 billion of commitments. Indeed, 93 percent of all capital raised last quarter was allocated to funds with global, European and North American strategies.

Figures in these markets were skewed by a small number of particularly large funds, including the Blackstone Group’s €5.1 billion Blackstone Real Estate Partners Europe IV, which closed at the end of March, and Pacific Investment Management Co. (PIMCO)’s $5.5 billion global PIMCO BRAVO Fund II.

“As we have experienced over many recent quarters, investors are clearly putting their faith – and their cheques – with the most venerable names: Blackstone’s dominance comes as no surprise,” said Dan Gunner, director of Research and Analytics at PEI. “Our conversations with investors reveal a continued strong appetite for private real estate, although with almost 650 funds currently on the fundraising trail, there is considerable competition for their attention.”

Asia-Pacific was the one region that did not follow the upward trend. Asia-focused funds had their least successful fundraising quarter since Q1 2012. Compared to the $2.4 billion raised for 11 Asia-focused funds in Q1 of last year, last quarter 7 Asian funds collected only $1.7 billion. It was an even starker contrast to Asia’s fundraising success in Q4 2013, when 7 Asian funds raised $5.3 billion.