Private real estate fundraising plunged in the third quarter as higher interest rates cooled investor appetites for risk.

Around the world, $18.2 billion was raised by 61 funds in the three months through September, a 71% decline from the second quarter, when 117 funds raised $63.4 billion, according to a report by Preqin. It was the slowest rate of fund closures in the present cycle of interest-rate increases, the research firm said.

Property markets around the world are in turmoil as interest-rate hikes by central banks have increased the cost of borrowing. At the same time, valuations have dropped for some property types, decreasing the returns investors can expect — especially for offices, which have been battered by the rise of remote work.

“Investment opportunities that can offer a stable positive net income stream and a clear investment exit route are very scarce,” said Henry Lam, associate vice president of research insights at Preqin. “Market players tend to take a wait-and-see approach, until the future pathway of interest rates is more certain.”

North America-focused funds accounted for the largest share of global fundraising in the third quarter, yet their proportion declined to 70% from 81% in the previous three months, according to the report. The Asia-Pacific region’s share increased to 24%. Japan, where borrowing costs remained low, was particularly attractive to investors, Preqin said.

Funds focused on Europe and the rest of the world raised just 6% of the total capital in the third quarter.

The dollar value of global property transactions slipped to $26.9 billion in the third quarter from $31.9 billion in the three months through June, Preqin said. Office sales declined 20%. Industrial and residential buildings traded most actively, with deals falling only 3.2% and 6.3%, respectively.

Uncertainty over interest rates will continue to weigh on real estate fundraising and transactions, according to Preqin, though investors will seek out property types or markets that promise more-certain returns.

“In the short term, say the coming one or two quarters, investment sentiment for real estate will remain subdued,” Lam said. “And global fundraising and deal-making are likely to remain quiet.”

This article was provided by Bloomberg News.