LONDON—The private equity real estate industry reached a record $900 billion in assets under management as of June 2018, marking a new high for the sector, Preqin recently reported. This trend is continuing it said, noting that fundraising has remained strong, deal making is at record levels and investor appetite is high. Looking ahead though, there are serious challenges ahead: high asset pricing is putting pressure on future return prospects, and both fund managers and investors foresee a market correction in the coming months. This suggests that the months ahead will be turbulent for private equity CRE fund managers, and may help explain why investors are increasingly looking to commit to large, established fund managers over smaller firms, Preqin says. "While investors generally plan to allocate more capital than ever before, it seems likely that fundraising will become an even more challenging prospect for many managers as competition continues to intensify," Tom Carr, head of Real Estate says in a prepared statement. "In response to this, many fund managers are looking to adapt their approach by changing their risk/return profile, expanding into different markets or offering alternative structures to investors." As the fundraising and deals markets continue to bifurcate, the industry is likely to become even more difficult to navigate for both parties, Preqin concludes. For more stats on these market dynamics, see our slideshow above.