Preqin’s quarterly update on real estate reflects a growing concern about uncertainty affecting property deals, a trend increasingly noted across various sources. This uncertainty persists even as CRE markets appear to be stabilizing and preparing for an upward movement. Despite these challenges, there are encouraging signs for the medium and long term.
Preqin’s data revealed a slowdown in transaction activity during the first quarter of 2025, a period when improvement was anticipated. Deal value dropped by more than a third, falling from $54 billion in the fourth quarter of 2024 to $35 billion in the first quarter of 2025. The number of deals declined by about 20%, from 1,241 to 987, although the count in Q1 2025 was slightly higher than in Q1 2024. Among these transactions, six exceeded $1 billion, including three in retail and one each in industrial, residential, and niche sectors. Preqin noted that these figures pertain to international deals and may not be directly comparable to U.S. data.
On a more positive note, private real estate funds raised a total of $30 billion across 143 vehicles during the quarter. This compares with $15 billion fetched in Q4 2024 across 214 vehicles, $23 billion in Q3 2024 across 159, $43 billion in Q2 2024 across 225, and $36 billion in Q1 2024 through 126.
An increasingly popular strategy is real estate debt. Funds raised approximately $11 billion in the first quarter, marking the highest amount since Q2 2022. This figure is somewhat skewed by the fact that $8 billion of the total was raised by Blackstone's Real Estate Debt Strategies V fund. According to Preqin, 392 real estate debt funds remain in the market, with CRE debt accounting for 17% of the $603 billion in new capital targeted by all private real estate debt funds. Investors and managers are attracted to this sector for its steady income and strong risk-return profile, which offers lower downside exposure compared to equity investments in property.
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