According to reports, Goldman Sachs' asset management department has raised $3.4 billion for its Vintage Real Estate Partners III fund and related instruments, making it one of the largest private real estate funds and aiming to benefit from the liquidity constraints of other investment managers and limited partners.

The fund is about 23% larger than the previous fund, which raised $2.75 billion in 2020.

According to reports, the fund's capital can be used to purchase portfolios of real estate fund shares from institutional investors and support liquidity transactions for limited partners of the fund.

The fund's cash can also be lent to fund managers and limited partners who seek liquidity but do not want to sell assets in a down market.

Before Goldman Sachs established this fund, private equity firms Blackstone (BX.US) and Ares Management had also raised second-market funds for real estate equity investments. At the end of last year, Blackstone raised $2.6 billion for its Strategic Partners Real Estate VIII fund and related instruments, while Ares raised $3.3 billion for its Landmark Real Estate IX and related funds.

Harold Hope, Global Secondary Market Director of Goldman Sachs Asset Management, said: 'We are beginning to see more incapacitation mechanisms... debt maturities, rent renewals, and other cyclical events force people to need liquidity.' 'Such transaction-driven market participants' demand for cash may last for several years.'