Preqin, the global firm focused on alternative assets data, tools, and insights, released its Preqin Global Report 2025: Real Estate.
The report from Preqin shows that global real estate aggregate transaction value in North America, Europe, and Asia-Pacific (APAC) all saw “a rebound during the first three quarters of 2024, compared to the same period in 2023.”
Meanwhile, fundraising moderated slightly in 2024, as the total capital raised during the same period reached “61% of last year’s total, or $96bn.”
The nearly three-year-long global monetary-tightening cycle appears to be nearing its end “as major economies announce interest rate cuts.”
Expectations of this shift sparked activity in the real estate capital market. Total deal value “across major markets showed growth by Q3 2024 compared with the same period in 2023.”
Across major regions, the APAC region stands out, with growth in real estate deal flow fueled by an “increase in the number of transactions.”
Although North America—known for commanding a significant portion of global deal value—experienced the slowest growth in aggregate deal value, at a “relatively modest 5%, during the first three quarters of 2024.”
By Q3 2024, the residential sector, which makes up the largest share of North America’s deal value, “fell by 3% compared to the same period in 2023.”
This decline marks the second consecutive year of “reduced residential contributions to the total regional deal value. ”
For global fundraising, activity “remained subdued” in 2024.
The aggregate capital raised from the first quarter to the third fell behind the same period in 2023 “by 22%, with no closures of funds exceeding $10bn, as seen in the previous year.”
Preqin analysts see this as an indication of investors “being in a ‘wait-and-see’ mode.”
Preqin data indicates a potential rise in “investor risk appetite when it comes to fund selection.”
Following a drop of over 70% in aggregate capital raised in 2023, “first-time private real estate fundraising rebounded in 2024.”
By Q3 2024, aggregate capital raised by first-time funds already surpassed 2023’s full-year total “by $1.7bn, reaching $6.8bn.”
The ability of first-time managers to close larger funds narrowed the difference between “first-time and experienced funds when it comes to average size.”
This was $136mn in 2024 – the “second lowest level of the last 10 years.”
Despite this, overall investors concentrated their allocations with larger managers who can “carry out higher degrees of diversification within their portfolios, with a view to mitigate market risk.”
The top 10 real estate funds maintained a “38% share of total capital raised from 2023 by Q3 2024, reaching $36bn.”
Henry Lam, Associate Vice President, Research Insights, at Preqin says:
“It is worth noting that the later-than-expected US rate-cut may have delayed the pace of investors’ deployment of new capital to funds in this year’s report. Investors are altering their allocations in terms of strategy and risk exposure to cater to this expected lower-interest-rate market cycle.”
Other notable findings from the Preqin Global Report 2025: Real Estate include the following:
- Strategy: Capital raising in core real estate stands out from the perspective of year-to-year aggregate fundraising. This is the only real estate strategy to raise more capital by Q3 2024 than in 2023, reaching $12bn. Opportunistic-led fundraising in 2023, securing 43% of total capital raised by real estate funds ($52bn) in the first three quarters of the year. However, value-added has demonstrated strong resilience and overtaken opportunistic this year, accounting for 37% ($36bn) over the same period.
- Investors’ direct investments: With direct investments by local investors representing three of the top five largest deals in Europe by Q3 2024, total deal value for LPs’ direct investments in the region jumped by 175% from the 2023 annual total. In expectation of upcoming rate cuts triggering a recovery in valuations, these substantial deals underscore investors’ aspirations to future real estate potential.
- Real Estate Investment Trust (REIT) performance: An analysis comparing the performance of private real estate funds to the S&P North America REIT Index total return index reveals a weak correlation between the two indices. From the data of Preqin and S&P Capital IQ, the average quarterly return difference of -3.8% (between Q1 2012 and Q2 2024) highlights the shortcomings of the REIT index in accurately representing the long-term returns of its private counterparts.