Preqin’s Real Estate Online contains fundraising information for over 3,800 private real estate funds that have reached a final close, including performance data for over 1,350 funds. Closed-end private real estate funds have a record $244bn in dry powder available to invest as of September 2015, up from $197bn in December 2014. As can be seen in the graph below, approximately half of the dry powder is accounted for by opportunistic funds, with $97bn available to invest. This is followed by value added funds ($54bn), debt funds ($40bn) and core funds ($30bn). The lowest levels of dry powder are held in core plus ($12bn) and distressed vehicles ($11bn).
The increase in uncalled capital available to private real estate fund managers is a result of strong fundraising over the last two years; in H1 2015, 96 real estate funds closed securing an aggregate $59bn, while the same period in 2014 saw 119 funds secure $52bn. The increase in dry powder means more capital is chasing real estate opportunities, leading to increased competition for assets and a surge in asset prices. As detailed in Preqin Investor Outlook: Real Estate, H2 2015, real estate firms will have to work hard to find value in the increasingly competitive marketplace if they are to alleviate the key concerns of institutional real estate investors; 63% cited valuations as the key concern for the real estate market in the next year, with interrelated issues like deal flow and concerns over the eventual performance of real estate vehicles chosen by 37% and 30% of surveyed real estate investors respectively.