While private markets are thriving, it is possibly surprising to see total global real estate assets under management (AUM) fall to €3.6trn (£3trn) in 2024, a 2.7% decline from the €3.7trn (£3.1trn) reported the previous year.
This decline marks the third consecutive year of contraction in the global non-listed real estate market, according to the Fund Manager Survey 2025 published today.
The continued contraction seems to reflect persistent market uncertainty, sub-trend economic growth, and historically low capital raising levels, which totalled just €118bn (£99bn) in 2024 – the second lowest since 2015.
The survey, collated by three real estate investment bodies: the Asian Association for Investors in Non-listed Real Estate Vehicles, the European Association for Investors in Non-Listed Real Estate Vehicles (INREV) and the National Council of Real Estate Investment Fiduciaries, also uncovers a number of findings.
First, there is a strengthening trend towards industry consolidation, with 11% of surveyed fund managers undergoing or planning mergers, and a further 7% indicating active acquisition intentions in 2025.
Second, capital concentration among the largest managers intensified, with fund managers in the upper quartile accounting for 83% of total AUM €3trn (£2.5trn), up from 79% in 2023.
Third, the global top 10 managers held steady with €1.9trn (£1.6trn) in total AUM at the end of 2024.
Fourth, total global dry powder fell to €195bn (£164bn) in 2024, representing 7.4% of total AUM – down from 8.0% the year prior.
Fifth, pension funds and insurance companies remained the primary sources of equity capital for global real estate, accounting for 43% and 19% respectively in 2024.
The point that despite the overall decline in assets under management the capital concentration among the largest managers has intensified, underscoring the dominance of large players, is an important one.
The results show a clearly continuing trend towards industry consolidation, particularly among bigger players, with the gap between large and small managers widening significantly.
This shift signals growing polarisation in the market, with larger players absorbing market share as smaller firms face headwinds.
On this, Iryna Pylypchuk, INREV’s director of research and market Information, said: “This year’s survey reflects a market continuing to recalibrate, and the real estate universe becoming even more concentrated and competitive in response to a continuously evolving global political and economic order.”
“While overall assets under management is down for a third year, we’re seeing the twin forces of consolidation and specialisation play out more clearly than ever – with large managers consolidating capital and smaller players leaning into their niche expertise to stay competitive,” Pylypchuk added. “Industry consolidation is expected to gain momentum, with 11% of respondents undertaking or planning mergers in 2025, and 7% pursuing acquisitions.”
This trend of consolidation, and the increasing concentration of assets under management within the biggest investment managers, poses questions over market dominance and accessibility, and needs to be one to watch over the long term.
Higher risk
Another interesting trend is that managers and investors are moving up the risk curve, particularly in Europe and North America.
Total global real estate allocations to core strategies dropped from 67% to 63% in 2024, while allocations to opportunistic strategies increased from 24% to 27%.
This heightened appetite for risk comes despite high levels of uncertainty and volatility in the market, indicating that investors are looking to take advantage of the current circumstances in order to boost returns.
On the issue of global dry power falling, Pylypchuk said: “The slight decline in dry powder may appear negative at first glance, but it reflects a positive shift as managers begin to deploy committed capital. This is a sign that the markets are moving favourably, and the pace of deployment is picking up.”
Pylypchuk also noted that in the wider picture, the survey results reflect that for the first time in decades, Europe is at the front of the global correction cycle, followed by North America and then Asia Pacific.
“Surplus savings and the recent agenda to power charge European economy with a focus on growth sectors give an additional impetus,” she said. “Asia Pacific may be more sensitive to currency volatility, especially against the dollar, whilst the euro is getting stronger.”
“As the US policies focus inward, there is a growing sentiment that if the European economy gets back on track, the euro has the potential to become a reserve currency in the next 15 years,” Pylypchuk said. “The market is picking up on this, and it is starting to believe in Europe again.”
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