Strong Q3 for PE Real Estate Fundraising

LONDON (Reuters) – Private equity real estate fundraising defied slumping property markets in the third quarter, consultancy Preqin said on Wednesday, as investors hoped for cheap property buying opportunities in coming years.

Preqin, which produces data on private equity, hedge funds and other parts of the financial sector, said $30.8 billion was raised in aggregate globally in the third quarter, down only slightly from $32.4 billion in the second quarter.

But Preqin said investors were more likely to commit to larger funds with proven strategies than smaller, unproven rivals charging the same level of management fees.

“Investor appetite for private equity real estate funds still remains at a high level, but these investors are becoming much more cautious in terms of where they place their money,” said Preqin spokesman Ignatius Fogarty in a statement.

The number of funds reaching final close dipped to 32 from 41, leaving a total number of 378 funds still seeking an aggregate $243 billion, up from 273 funds seeking $127 billion as recently as January this year.

“In the current economic climate, many smaller firms could find market conditions too challenging, and it is likely that we will see firms putting their funds on hold until the market becomes more settled,” Fogarty said.

(Reporting by Simon Meads; Editing by David Holmes)