Private real estate fundraising finally found its footing last year, but don’t call it a comeback yet.
Global private real estate funds raised $172 billion last year, a 13 percent increase from $152 billion the year prior — the first annual gain since 2021, according to a report from With Intelligence by S&P Global. The modest rebound signals renewed investor appetite, but the recovery remains constrained by elevated borrowing costs, reports Bisnow.
The 10-year Treasury yield, a key benchmark for commercial real estate debt, has hovered above 4 percent for much of the past two-plus years, keeping financing expensive even as the Federal Reserve trimmed short-term rates. That dynamic continues to weigh on deal volume and, by extension, fundraising momentum.
Capital is concentrating at the top. The 10 largest funds collectively pulled in $68 billion last year, roughly in line with totals since 2022, as major managers bulk up through acquisitions and platform expansion.
Meanwhile, smaller and emerging managers are struggling to break through: just two firms — Derby Lane and Town Lane Management — accounted for more than half of the $4.2 billion raised by new entrants through the third quarter.
Investors are sticking to familiar plays. Nearly 90 percent of capital raised last year flowed into opportunistic, value-add and debt strategies, underscoring a continued preference for higher-return, flexible approaches in a choppy market.
There are tailwinds. Several large pension systems remain under-allocated to real estate, including the State Teachers Retirement System of Ohio, Healthcare of Ontario Pension Plan and Colorado Public Employees’ Retirement Association. The Ontario fund alone has roughly $8 billion left to deploy, offering a potential pipeline for future fundraising.
Still, expectations for 2026 are muted. Fund targets are largely in line with last year, suggesting managers aren’t betting on a sharp rebound.
At the same time, banks — which held nearly 60 percent of last year’s maturing CRE mortgages — are expected to pull back their exposure in coming years, potentially opening the door for alternative lenders and debt funds to capture more market share.
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