A total of 53 private real estate funds had a final close globally in the third quarter, securing a total of $24 billion, continuing a slowdown from the previous quarter which saw 74 funds raise $32 billion, according to the latest data from Preqin.
Although Preqin expects the figures to jump by up to 10%, this still marks a slowdown for the second quarter in a row.
Of the third-quarter total, $15 billion was raised by 35 North America-focused funds and $7.0 billion was secured by 12 funds focusing on Europe. Two Asia-focused funds collected $1.3 billion.
Year-to-date, 71% of the closed funds hit or exceeded their target size, compared with 57% in the comparable portion of 2017. About a quarter of the closed funds hit at least 125% of their initial target size, according to Preqin.
Opportunistic and value-added funds raised the most during the third quarter — $9.0 billion from 13 funds and $8.9 billion from 20 funds, respectively. Carlyle Group LP's opportunistic Carlyle Realty Partners VIII was the largest fund to close in the quarter, raising $5.5 billion, exceeding its $5 billion target.
As of Sept. 30, dry powder reached a record $294 billion, up from $282 billion at the end of 2017.
As at the start of October, there were 634 funds targeting $219 billion in total, compared to 624 funds seeking $203 billion at the start of July.
Tom Carr, head of real estate at Preqin, said that despite the second-quarter slowdown, overall capital totals are in line with historic averages. He added that core and core-plus strategies might attract more interest in the upcoming quarters should investors continue to move down the risk/return spectrum.