Preqin, the global firm focused on alternatives data and insight, has recently released its Real Estate Q3 2024 Quarterly Update report.
The report shared with CI by Preqin revealed that the gradual rebound in global real estate fundraising this year “stalled in Q3 2024, as capital raised declined more than 50% since Q2 2024, to $20bn.”
Looking at the regional level, Henry Lam, lead author of the report, highlights there was a “revived investor confidence in Europe-focused funds this quarter, with aggregate capital raised by Europe-focused funds more than doubling from $2bn in Q2 2024 to $6bn in Q3 2024.”
Meanwhile, North America-focused funds recorded the “largest drop” in aggregate capital raised of the major regions and “contracted by more than 60% to $14bn.”
But given North America-focused funds dominate global fundraising in terms of capital raised, Preqin analysts see that Europe’s rebound only slightly alleviates the subdued third quarter fundraising total.
Key report facts and takeaways are shared below:
- Global real estate deal-making cooled: Mirroring fundraising, global real estate deals activity also moderated in Q3 2024, with an 11% decline in transaction value, from $40bn in Q2 2024 to $35bn. However, this represented only a slight pullback, as Q3 2024 was the second strongest quarter since the end of 2022.
- Regional deal-making trends: Europe experienced the greatest decline in total real estate deal value. After a spike in Q2 2024, Europe’s real estate market has since cooled, with aggregate value nearly halving from $8bn to $4.1bn. Meanwhile, North America and Asia-Pacific (APAC) real estate deal values declined by $0.5bn and $0.3bn, respectively, sustaining relatively resilient momentum. The sum of North America’s top-five deals fell by 50%, but was offset somewhat by a jump in deal volume, from 690 in Q2 2024 to 872 in Q3 2024.
- Residential is largest portion of total deal value: Residential was the most favored property type by buyers in the first half of 2024 and accounted for 20% of total global real estate deal value at $9 bn. Moving into the second half of the year, residential transaction value has continued to trend up, while all other sectors have seen a decline. Also, the number of residential deals climbed 28%, from 206 in Q2 2024 to 264 in Q3 2024.
Henry Lam, AVP, Research Insights, at Preqin said that while global real estate deal value “fell in the third quarter of 2024, this is not necessarily an indication of negative market sentiment.”
Lam added that so far this year, they have observed some “big” real estate deals via other investment options, “including the acquisition of an entity to gain access to its real estate holdings, rather than acquiring the physical assets separately.”
