Private Real Estate Could See ‘Two-Tiered’ Fund Market

Headquartered in London, Preqin says more than half of fund managers expect to see more family office activity.

LONDON—Private real estate fundraising has grown 134% since 2009, reaching US$120 bilion in 2016. However, Preqin says, the number of new firms established each year has decreased 126 new firms in 2006 to just 37 last year, and 87% of fund managers surveyed by Preqin this past June expect further consolidation in the next few years.

“Although the private real estate market has seen a reduced pace of growth in recent years, investor appetite has remained strong, and fund managers have been able to maintain high fundraising levels,” says Oliver Senchal, head of real estate products at Preqin. “Fund managers therefore expect the industry to grow by 2020 and similarly expect to see an influx to their ranks by that time.