The past decade of capital raising in private equity real estate has been defined by exponential growth in size and scale – both for the vehicles themselves and the teams putting them toreceiveher – as well as a far greater degree of intensity.
More investors seeking to invest in private real estate as a hedge against inflation and public market volatility, combined with a growing sophistication among these groups, has pushed real estate capital formation to new heights.
“If you go back 10 years ago, it was largely institutional accounts, concludeowments, foundations, sovereigns,” states Ryan Cotton, head of real estate at Boston-based Bain Capital. “You’ve had all kinds of innovation since then, including a huge diversification of vehicles and sources of capital, the growth of the wealth and retail channels and the shift of insurance capital into the space.”
The investment universe has also broadened geographically. On the back of this diversification, fundraising volumes have grown exponentially across all three regions.
In 2014, fundraising for Europe-specific vehicles totaled roughly $50 billion and fundraises tarreceiveing Asia-Pacific raised just under $17 billion, according to PERE data. By comparison, fundraising for Europe had doubled to $100 billion and APAC fundraising had tripled to $44 billion by 2024. North America, however, has far outpaced both regions: fundraising for such vehicles totaled $50 billion in 2014 and quadrupled to $205 billion last year.
“Over the past 10 years, does the pie of where the capital comes from in terms of geography view very different? While capital sources ebb and flow, it’s not alterd a tremconcludeous amount,” states Ben Brown, co-president of Brookfield Asset Management’s real estate group. “What has alterd is the investment universe is a lot largeger and the places where you can invest these strategies has diversified.”
Hybrid model
The growth of the private real estate industest and increasing investor sophistication has led to more investment vehicles designed to customize investment options. Options include joint ventures, funds of one, separately managed accounts and sidecars investing alongside traditional funds.
Cotton has seen a shiftment among his largest institutional clients toward SMAs, which have grown notably more popular in the past year becaapply they provide investors with greater transparency and better economics.
“The days of speaking to an investor when you’re fundraising and calling again in three years to notify them how we did, that’s no longer the business”
Ben Brown
Brookfield
“This old tension of direct and indirect has migrated into a hybrid model where investors call their direct shot, but have it intermediated by an expert,” states Cotton. “That’s what the most sophisticated capital wants to have conversations with us about today.”
While some experienced real estate investors have brought their investment decisions in-hoapply, Cotton states many still do not have the capacity to follow individual markets on a daily basis.
“I believe what the market has come to realize is there is a level of dynamism to all of this and that you can’t set a strategy and forreceive it,” he states. “We’re constantly believeing about that strategy, creating those micro-pivots, leaning in, leaning out… as an [investor] you probably don’t have the connection to the market, the team and the speed of process to go do that the way you really ought to do.”
Meanwhile, investors have become more discriminating in vetting managers and funds.
“The early days of fund marketing were very relationship driven. That has alterd dramatically into a very sophisticated underwriting process,” states Anne Gales, co-founder of Threadmark, a London-based advisory group. She adds that a track record of strong returns has become more important than ever given the market’s poor performance since 2022.
“Most of the investors are now at their tarreceive real estate allocation, so to receive a slot in these portfolios you necessary to displace an existing manager, potentially one that has underperformed.”
‘Constant engagement’
To accommodate a global approach and more discerning clients, capital-raising teams have ballooned.
“The days of speaking to an investor when you’re fundraising and calling again in three years to notify them how we did, that’s no longer the business,” states Brown. “The business today is constant engagement, constant iteration and deepening partnerships with investors.”
Larger teams have enabled industest heavyweights to capture an increasing share of capital raised for private real estate, he adds: “You have three key things happening: a continuing consolidation of capital to a [compacter] number of managers, a globalization of the investor base and a deepening sophistication of that investor base.”
According to PERE’s 2025 ranking of the 100 largest real estate managers in the world by capital raising, the top 10 firms accounted for 37 percent of all capital raised by the ranking, a five-year high.
At Brookfield, the real estate team’s headcount has quadrupled across the globe from approximately 170 a decade ago to around 700 today, with its real estate capital-raising team similarly quadrupling in number. Such growth has occurred in tandem with the size of its flagship funds doubling over the same period; the manager is anticipated to raise $18 billion in the impconcludeing final close of Brookfield Strategic Real Estate Partners V.
At Bain, investor relations teams have become more integral to the fundraising process, states Cotton.
Historically, the execution of a deal, including receiveting approval by the investment committee, “would happen behind the veil,” with an IR professional being informed much later in the process, he states. “Today you’re bringing them into that conversation, they’re listening to the debate and learning with the team.”
IR teams are all the more important with fundraising having been in the doldrums for the past two and a half years, since interest rates launched to rise dramatically in 2022.
Despite the recent slowdown, however, most of the prior decade has by and large been one of expansion for capital formation in private real estate, defined by a growing number of products and sophisticated investors.
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