Property funds are putting off fresh capital raisings in response to the uncertain outlook for investments in the sector and a decline in distressed assets coming to the market because of easier credit for developers.

It was difficult for underperforming real estate funds to raise fresh capital, while in the absence of attractive targets other funds remained cashed-up, said Goodwin Gaw, a co-founder of real estate investment fund Gaw Capital Partners Hong Kong.

Just 60 per cent of the capital raised for the group's second property fund, Gaw Capital Real Estate Fund II, had so far been invested and the firm was in no rush to tap the private equity market for capital for a third fund, Gaw said.

South China Morning Post