Investors committed $218.4bn (£160.8bn) to private real estate last year, a jump of a quarter from 2020’s figure and 44% above the pre-pandemic 10-year average.
The rush to put money to work meant that a growing number of funds smashed their targets, according to analysis from data provider Realfin – about 44% of funds surpassed their fundraising target, compared with 33% in 2020 and a 15-year high.
Despite the leap in investment, the number of unlisted real estate funds reaching a final close dipped slightly year-on-year, down roughly 3% at 449. The average fund size hit a record of $625.4m, up by two-thirds on the 10-year average.
Value-add funds secured the largest market share at 35% of capital raised, although opportunistic funds saw the greatest growth, with capital raised up by 79%.
Realfin chief executive Riz Malik said: “2021 saw a strong fundraising rebound from the sharp falls in 2020, as investors sought to put capital to work by turning to more ambitious strategies.
“However, we’re seeing competition intensify as the number of funds seeking capital continues to rise, the number of funds reaching close remaining depressed, and average fund size climbing to an unprecedented $625m.”