Private Equity Real Estate Dry Powder

by Farhaz Miah

  • 25 Feb 2011
  • RE

There is currently an estimated $164bn of dry powder available for private equity real estate funds; a decline of $21bn from December 2009. This is a result of the slow fundraising environment, but also suggests that there has been some pickup in investment activity by fund managers, with more call-ups being made.

Dry powder for North American real estate investment has increased noticeably in recent years, from $27bn in December 2003 to $100bn in December 2009. $90bn of dry powder is currently available to primarily North America-focused funds, equating to 55% of dry powder available globally. The amount of capital available to primarily Asia and Rest of World-focused funds equates to $36bn, with $38bn available to primarily Europe-focused funds. Dry powder available for Asia and Rest of World investments increased consistently on a year-on-year basis between December 2004 and December 2008. The increase can be attributed to the amount of capital raised by Asia and Rest of World-focused funds in this period, as investors looked to take advantage of growth in Asian property markets and the high returns generated by certain investments in this area. Between December 2008 and today, the amount of dry powder available declined, as many North American and European institutional investors focused their limited resources closer to home, and Asia and Rest of World-focused funds experienced difficulty in raising fresh capital to replenish dry powder stocks. The availability of dry powder for European investments has remained relatively consistent since December 2007, ranging between $35bn and $38bn.

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