The PERE Podcast Is real estate’s allocation slide a brief dip or a sign of a larger rebalancing?
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Oct 24, 2025 Harrison Connery, a senior reporter at PERE specializing in private real estate, and Douglas Weill, co-founder of Hodes Weill & Associates and capital markets adviser, dive into the recent decline in institutional allocations to real estate. They discuss how high interest rates and competitive asset classes like private credit are influencing this trend. Despite lower allocations, investor conviction is rising, indicating optimism about future fundraising. They also explore regional variations and the expected uptick in transaction volumes and closed-end fund commitments.
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Historic First Drop In Targets
- Target allocations to private real estate ticked down for the first time since 2013, slipping from 10.8% to 10.7% in 2025.
- The decline reflects a prolonged downturn since 2022 driven by higher interest rates and lower transaction volumes.
Actual Allocations Lag Targets
- Actual allocations are now below targets for most investor types, reflecting muted fundraising and lower distributions.
- PERI's investor 100 also showed the first aggregate allocation decline since 2020, signaling a broader plateau.
Private Credit Outcompetes Infrastructure
- Private credit is the top alternative drawing allocation away from real estate, favored by 60% of survey respondents.
- Infrastructure and private equity follow, showing competition for the same institutional dollar.