Real estate secondaries transactions hit a record $20 billion in 2025, driven by persistent supply constraints and investor demand for stabilized assets. Ares Management, a key player in the sector, highlights that distributions remain below pre-2020 levels despite increased deal activity, signaling lingering challenges in liquidity across core and value-add property segments.

The sector's growth trajectory appears resilient, with analysts projecting potential doubling of annual transaction volumes over the next five years. This expansion stems from continued institutional appetite for real estate as a hedge against inflation and currency volatility, particularly in markets with strong rental demand fundamentals. However, the report cautions that uneven distribution patterns could limit near-term liquidity improvements, creating opportunities for patient investors.

While the $20 billion 2025 figure represents a 30% year-over-year increase from 2024, the data reveals regional disparities. Core U.S. markets maintain 65% of total volume, while European transactions lag at 22%, reflecting divergent regulatory environments and post-pandemic recovery trajectories. Secondary markets in Asia-Pacific show emerging momentum, particularly in logistics and industrial real estate tied to e-commerce growth.

Investors should monitor the gap between deal volume and cash flow generation, as the article notes that 40% of 2025 transactions involved assets with sub-7% internal rates of return. This divergence between deal frequency and profitability underscores the need for selective capital allocation in an otherwise buoyant secondary market. The trend suggests a maturing asset class where volume metrics alone may not fully capture investment viability.