The Real Deal New York

More dry powder for Americas as European banks pull back

Total money raised for global real estate investment fell for the first time since 2011, but portion set aside for Americas climbed
March 14, 2017 02:30PM

The amount of equity set aside for real estate in the Americas exceeded Europe, the Middle East and Africa for the first time as wary European banks tighten their purse strings.

For the first time since 2011, the amount of money available for real estate investment across the globe declined, falling 2 percent on the year to $435 billion, according to a Cushman & Wakefield report cited by Bloomberg.

Led by a strong dollar, equity available for real estate in the Americas climbed 8.2 percent as investors sought to protect themselves from inflation.

“As the real estate cycle enters a stage of maturity in many key markets, investor focus has shifted from raising new funds to identifying and deploying capital already allocated to the sector,” read Cushman’s report. “Banks and alternative lenders saw a large rise in new debt origination from 2014 to 2016, but this trend appears to have moderated in 2016, alongside a slowdown in investment transaction volumes.”

Alternative lenders – also known as shadow banks – such as the Blackstone Group and Starwood Property Trust are increasingly stepping in to fill the void as regulated banks pull back. At the end of 2016, real estate funds’ dry powder stood at a record $237 billion, up from $136 billion in 2012. [Bloomberg]Rich Bockmann