Key Takeaways
- • Global private real estate funds raised $172 billion in 2025, representing a 13 percent increase from $152 billion in 2024—marking the first annual gain in fundraising since 2021, according to With Intelligence by S&P Global.
- • Capital concentration accelerated, with the 10 largest funds collecting $68 billion collectively, while smaller emerging managers face significant headwinds; only two firms (Derby Lane and Town Lane Management) accounted for more than half of the $4.2 billion raised by new entrants through Q3 2025.
- • Nearly 90 percent of capital flowed into opportunistic, value-add, and debt strategies, signaling investor preference for flexible, higher-return approaches despite elevated borrowing costs and a 10-year Treasury yield remaining above 4 percent.
- • Several major pension systems remain under-allocated to real estate, including Healthcare of Ontario Pension Plan ($8 billion left to deploy) and Colorado Public Employees' Retirement Association, presenting potential capital pipelines for fundraising growth.
- • Elevated borrowing costs continue to constrain deal volume and fundraising momentum, with the 10-year Treasury yield—a critical CRE debt benchmark—hovering above 4 percent despite Federal Reserve rate trimming on short-term rates.
Summary
Private real estate fundraising posted its first annual gain since 2021, with global funds raising $172 billion in 2025—a 13 percent increase from $152 billion the prior year. While the rebound signals renewed investor appetite, the recovery remains measured and uneven across market participants. The modest growth reflects persistent headwinds from elevated borrowing costs and macroeconomic uncertainty, even as capital markets show selective signs of stabilization.
The 10-year Treasury yield, a foundational benchmark for commercial real estate debt pricing, has remained anchored above 4 percent for more than two years. This dynamic continues to compress deal economics and curb fundraising velocity across the sector. Although the Federal Reserve has trimmed short-term rates, long-duration CRE financing remains expensive relative to historical norms, limiting the volume of financeable transactions and constraining the pool of deployable capital.
Capital distribution has grown increasingly concentrated at the top tier. The 10 largest funds collectively secured approximately $68 billion in 2025, maintaining consistent totals relative to 2022 levels as major asset managers expand through acquisitions and platform consolidation. Conversely, smaller and emerging managers face severe fundraising headwinds. Just two firms—Derby Lane and Town Lane Management—accounted for more than 50 percent of the $4.2 billion raised by new entrants through the third quarter of 2025, indicating a challenging competitive environment for smaller players seeking to establish or grow platforms.
Investor capital allocation reflects clear strategic preferences in an uncertain environment. Nearly 90 percent of capital raised in 2025 flowed into opportunistic, value-add, and debt strategies. This concentration underscores limited appetite for core or stabilized assets and a continued demand for flexible, higher-return vehicles capable of navigating market volatility and asset repricing cycles.
Forward-looking tailwinds exist through significant under-allocation among major institutional investors. Several large pension systems—including Healthcare of Ontario Pension Plan with approximately $8 billion remaining to deploy, State Teachers Retirement System of Ohio, and Colorado Public Employees' Retirement Association—maintain below-target real estate allocations, creating a potential capital pipeline for future fundraising cycles. However, expectations for 2026 fundraising activity remain muted, as higher rates and selective market recovery continue to limit broad-based momentum.
The 10-year Treasury yield, a foundational benchmark for commercial real estate debt pricing, has remained anchored above 4 percent for more than two years. This dynamic continues to compress deal economics and curb fundraising velocity across the sector. Although the Federal Reserve has trimmed short-term rates, long-duration CRE financing remains expensive relative to historical norms, limiting the volume of financeable transactions and constraining the pool of deployable capital.
Capital distribution has grown increasingly concentrated at the top tier. The 10 largest funds collectively secured approximately $68 billion in 2025, maintaining consistent totals relative to 2022 levels as major asset managers expand through acquisitions and platform consolidation. Conversely, smaller and emerging managers face severe fundraising headwinds. Just two firms—Derby Lane and Town Lane Management—accounted for more than 50 percent of the $4.2 billion raised by new entrants through the third quarter of 2025, indicating a challenging competitive environment for smaller players seeking to establish or grow platforms.
Investor capital allocation reflects clear strategic preferences in an uncertain environment. Nearly 90 percent of capital raised in 2025 flowed into opportunistic, value-add, and debt strategies. This concentration underscores limited appetite for core or stabilized assets and a continued demand for flexible, higher-return vehicles capable of navigating market volatility and asset repricing cycles.
Forward-looking tailwinds exist through significant under-allocation among major institutional investors. Several large pension systems—including Healthcare of Ontario Pension Plan with approximately $8 billion remaining to deploy, State Teachers Retirement System of Ohio, and Colorado Public Employees' Retirement Association—maintain below-target real estate allocations, creating a potential capital pipeline for future fundraising cycles. However, expectations for 2026 fundraising activity remain muted, as higher rates and selective market recovery continue to limit broad-based momentum.
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