Private real estate fundraising significantly decreased in Q3 due to higher interest rates diminishing investor interest in risk. A mere USD18.2bn was raised globally by 61 funds, marking a 71% decline from the previous quarter's USD63.4bn raised by 117 funds, as reported by Preqin. This period witnessed the slowest rate of fund closures amidst ongoing interest-rate hikes, causing turmoil in property markets worldwide. The cost of borrowing surged, property valuations dropped, and expected returns diminished, particularly for office space affected by the remote working trend. Investors are now adopting a cautious wait-and-see stance, seeking stable, positive net income streams and clear exit strategies, which are currently scarce. The Asia-Pacific region, especially Japan, saw an increase to 24%.
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