Although fundraising for private equity real estate remains high, cautious investors have been less willing to invest with smaller fund managers, and it is the larger fund managers that have enjoyed success in Q3. The value of funds raised has remained high, however the number of funds closing has dropped significantly, leading to significant congestion and difficulties in the fundraising market. A total of 32 private equity real estate funds reached a final close in Q3 2008, raising an aggregate $30.8 billion. Only Q2 2007 and Q2 2008 have exceeded Q3 2008 in terms of aggregate capital raised.
Q3 2008 has seen the lowest number of funds closed since Q1 2005, when 29 funds raised an aggregate $16 billion. The average fund size for funds closed in Q3 2008 is $962 million, compared to $548 million in Q2 2007, the biggest quarter in terms of private equity real estate fundraising. This is due to the increasing dominance of larger funds in the private equity real estate industry. To date in 2008, 109 funds have reached a final close, compared to the 145 which had reached a final close at the same stage last year.
D.C.