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Fundraising report: Investors put the brakes on new commitments
Economic uncertainty, rising interest rates, geopolitical tensions and the shifting of portfolio allocations due to the denominator effect have caused many investors to hit the pause button until there is more clarity on the direction of the economy, as well as on the capital markets and property markets. As a result, new capital commitments have dried up, and fund closings during the first quarter of 2023 were few and far between.
During the first three months of the year, only 15 funds reached final closings, raising a meager $12.4 billion, according to Institutional Real Estate, Inc.’s IREI.Q database. To put those figures in perspective, it was the fewest number of funds to close in a quarter since second quarter 2011 (15), and it was the lowest dollar volume since first quarter 2013 ($8.1 billion). The first quarter 2023 fundraising total was down 61 percent from the year-ago figure of $31.8 billion, and it was down 75 percent from the fourth quarter 2022 mark of $49.0