“Although we are seeing fewer funds close than in previous years, we are seeing larger average fund sizes,” Senchal says. “In fact, Q3 2017 has the second highest average fund size ever recorded at $618 million. However, overall aggregate capital is falling, and although investors report a high level of satisfaction for the asset class, fund managers will need to demonstrate how they can source attractive investment opportunities in order to see increased fundraising success.”

Larger average funds or no, even the high water mark of Q3 was lower than the previous quarter's. Carlyle Realty Partners VIII was the largest fund to close in last quarter, reaching $4 billion, just over half the $7.8-billion total of Q2's largest fund, Blackstone Real Estate Partners Europe V.

As of September, dry powder available to real estate managers stood at $243 billion, comparable with the previous quarter. Looking ahead, Preqin says there are 569 private real estate funds in market at the start of Q4, seeking a total of $185 billion from investors.

Across all sectors, Preqin sees Q3 representing “a slight stumble” in what otherwise has been looking like a record-setting year for the private equity industry. Q3 saw 267 funds close with a total of $150 billion, compared to 381 funds that closed in Q2 with a total of $204 billion.

That being said, Preqin notes that the third quarter of a year frequently sees less fundraising activity. Moreover, Q3 of this year saw the closing of the biggest private capital fund to date, Apollo Investment Fund IX, which at $24.7 billion exceeded the previous record-setter—2007's Blackstone Capital Partners V—by $3 billion.