This article is from the Australian Property Journal archive
A SLOWDOWN in capital raised by North America-focused real estate funds led to a steep drop in global fundraising in the September quarter, while Europe-focused funds’ quarterly fundraising surged.
Prequin’s latest data showed the gradual rebound in global real estate fundraising this year stalled over the three-month period, as capital raised declined more than 50% to $20 billion.
That was on the back of North America-focused funds recording the largest drop in aggregate capital raised of the major regions, of more than 60% to $14 billion.
Aggregate capital raised by Europe-focused funds more than doubled from $2 billion in the June quarter to $6 billion.
Mirroring fundraising, global real estate deals activity also moderated in the September quarter, with an 11% decline in transaction value, from $40 billion to $35 billion. However, this represented only a slight pullback, as the September quarter was the second-strongest quarter since the end of 2022.
“While global real estate deal value fell in the third quarter of 2024, this is not necessarily an indication of negative market sentiment. So far this year, we have observed some big real estate deals via other investment options, including the acquisition of an entity to gain access to its real estate holdings, rather than acquiring the physical assets separately,” said Henry Lam, AVP, research insights at Preqin.
Blackstone took AIR Communities, a multi-family US-listed REIT, private in the second quarter of 2024 for $10 billion, while in the third quarter, Blackstone, including capital managed by Blackstone Real Estate Partners partnered with CPP Investment Board to buy Australia-based data centre operator AirTrunk with 11 data centres across Asia-Pacific, for $24 billion. Starwood Capital Group acquired Balanced Commercial Property Trust in the United Kingdom for £674 million.
Europe experienced the greatest decline in total real estate deal value. After a spike I the June quarter, Europe’s real estate market has since cooled, with aggregate value nearly halving from $8 billion to $4.1 billion. Meanwhile, North America and Asia-Pacific real estate deal values declined by $0.5 billion and $0.3 billion. The sum of North America’s top-five deals fell by 50%, but was offset somewhat by a jump in deal volume, from 690 in to 872.
Residential was the most-favoured property type by buyers in the first half of 2024 and accounted for 20% of total global real estate deal value, at $9 billion. Residential transaction value has continued to trend up into the second half, while all other sectors have seen a decline. The number of residential deals climbed 28% in the September quarter, from 206 to 264.
Preqin’s June investor survey showed that investors’ fund commitment plans remain similar to 2023, despite more optimistic expectations for the market in the next 12 months. Preqin expects 2024 real estate fundraising to be on par with, if not slightly higher than, 2023.
