Private real estate fundraising began to regain some footing in 2025, marking the sector’s first annual increase since the post-2021 slowdown. But the rebound appears measured rather than dramatic, with investors still navigating elevated borrowing costs, uncertainty in global markets and a more selective capital-raising environment.
Global private real estate funds raised $172 billion in 2025, a 13% increase from $152 billion the prior year, according to a report from With Intelligence by S&P Global. While the gain suggests renewed appetite for real estate allocations, the report indicated that fundraising is not expected to quickly return to the highs reached in 2021 and 2022.
One major reason is the continued pressure from higher interest rates. The 10-year Treasury yield, a key benchmark for commercial real estate financing, has remained above 4% for most of the past two and a half years. Even with several Federal Reserve cuts to short-term rates, longer-term borrowing costs have continued to limit transaction activity and temper investor expectations.
The outlook for 2026 also points to a gradual recovery rather than a surge. The largest active closed-end real estate funds are targeting capital raises similar to 2025 levels, suggesting the market is not yet positioned for a major acceleration. Nearly 90% of the capital raised in 2025 went into opportunistic, value-add and debt strategies, reflecting investor preference for strategies that can either capture distress, reposition assets or benefit from financing gaps.
Fundraising strength has remained concentrated among the industry’s largest managers. The 10 biggest real estate funds raised $68 billion in 2025, holding relatively steady from levels seen since 2022. Larger general partners have been able to strengthen their positions through scale, asset growth and mergers and acquisitions, giving investors access to broader platforms and diversified strategies.
Smaller and newer managers have faced a tougher path. By the third quarter of last year, new real estate managers had raised $4.2 billion, with more than half of that amount coming from just two firms: Derby Lane and Town Lane Management. That concentration underscores how difficult the fundraising market remains for emerging managers without established track records or specialized strategies.
The debt side of the market is also shifting. Banks represented nearly 60% of originated commercial real estate mortgages maturing in 2025, but their share is expected to decline over the next five years as larger financial institutions reduce exposure to the sector. The dollar value of maturing commercial loans held by banks is projected to reach $387 billion in 2029 before easing to $354 billion in 2030.
Despite those headwinds, some institutional capital could support future fundraising. Several large pension funds remain below their target allocations to real estate, including the State Teachers Retirement System of Ohio, the Healthcare of Ontario Pension Plan and the Colorado Public Employees’ Retirement Association. The Ontario pension fund alone reportedly has $8 billion in real estate commitments still to deploy.
For commercial real estate, the data points to a market that is no longer frozen, but still far from fully recovered. Capital is moving again, though cautiously, and managers with scale, strong relationships and strategies tied to market disruption appear best positioned to capture it.
Source: Bisnow