Private equity real estate fundraising was "substantial" in 2018 but slowed year over year, potentially as a result of investors' expectations for a near- or medium-term market correction, research firm Preqin said.
Overall, 298 funds raised $118 billion globally in 2018. In 2017, 406 funds raised $132 billion. Preqin said the 2018 total could rise by up to 10% as more data becomes available.
Funds closed in 2018 spent 18 months on average in the market, representing a 10-year high. In a report, Tom Carr, the firm's head of real estate, described "some signs of hesitancy" in the market. "Activity was undoubtedly still substantial, with funds raising more than $100 [billion] for the sixth consecutive year, but the pace of fund closures has notably slowed," he said.
Roughly half of investors surveyed by Preqin said they expect a market correction within three years. Still, investors continued to favor higher-risk value-added and opportunistic investments. Core and core-plus fundraising declined significantly in 2018, to $6.1 billion from $15 billion in 2017.
Carr described investor appetite for real estate as still robust. At the start of 2019, 674 real estate funds were in the market looking to raise a combined $250 billion, up from 573 funds seeking $191 billion at the start of 2018.