Fundraising data from Preqin’s Real Estate Online shows there are currently 32 private real estate funds in market that are focused on countries outside the more traditional markets of North America, Europe and Asia, targeting an aggregate $6.3bn in capital commitments. In terms of primary geographic focus, most (14) of these vehicles target Latin America, with nine funds targeting Africa, six focusing on Australasia and three vehicles looking to invest in the Middle East and North Africa (MENA) region.
As illustrated by the chart below, the distribution of aggregate capital raised by Latin America-focused funds over the past seven years reflects a double-dip pattern, correlating with the global economic downturn. Between 2007 and 2010, the amount of capital raised declined from $2.9bn to $1bn, rallying to a peak of $4.4bn in 2012. This fell sharply to $700mn in 2013, before rising to $1.2bn in 2014 YTD.
The chart also reveals a changing composition of the primary locations targeted within Latin America. Of all Latin America-focused funds closed since 2006, Brazil has remained the most prominent location, with an aggregate $12.5bn in capital raised by funds focusing solely on this location. Pan-Latin America-based vehicles raised $2.2bn during this period and funds primarily targeting Mexico raised $4.8bn. Although Mexico-focused funds successfully raised vehicles between 2007 and 2009, absolutely no capital was raised in the last two years for private real estate funds solely focused on this country.
Australasia-focused funds have demonstrated a similar volatile trend in terms of the distribution of capital raised. Between 2007 and 2009, fundraising fell from $4.5bn to $300mn, gradually recovered to $1.7bn in 2012 before falling again to $300mn in 2014.
In recent years, Africa-focused real estate fundraising has seen a steady rise in aggregate capital raised. Funds closed between 2006 and 2008 raised an aggregate $250mn, while funds closed between 2009 and 2011 raised $405mn. Of the funds closed between 2012 and 2014, the figure is $528mn. By contrast, the opposite trend prevailed in the MENA region. Between 2006 and 2007, $1.9bn was raised, sharply declining during the post-recession period to $661mn between 2008 and 2009, and only raising $295mn between 2012 and 2014. Notably, 22 funds closed between 2006 and 2007 but between 2010 and 2014, this fell to only six vehicles.
GLP Brazil Income Partners II is the largest fund focused outside the traditional regions to reach a final close between 2013 and 2014. The Brazil-focused fund raised BRL 2.5bn in aggregate capital for its core vehicle. The second largest fund, Kinea Renda Imobiliaria - 4th tranche, reached a final close in 2013 having raised BRL 933mn. This vehicle also pursued a core strategy within Brazil.