Investors are putting more money into real estate debt funds after banks reduced the size of their loan books to meet tougher regulatory requirements, DTZ Group Plc said.
The amount of money earmarked for real-estate debt funds rose 54 percent to $29 billion in the first half, according to a report published today by the London-based real estate adviser. The company estimates that funds are seeking to raise an additional $17 billion to be deployed globally or in Europe by acquiring bank loan portfolios or through lending.
In Europe, the amount of money earmarked for real estate debt is probably inadequate to fill the funding gap caused by lenders’ retrenchment. Banks account for 94 percent of real estate lending in Europe, or 2.4 trillion euros ($3.1 trillion), and may reduce loans by as much a 25 percent in the next three to five years, Morgan Stanley estimates.