Cut in property lending by European banks
The amount of money available for property investment globally has fallen on an annual basis for the first time since 2011, led by Europe, as the amount of debt on offer diminishes, according to a report published by broker Cushman & Wakefield Inc. Lenders are prepared to offer less credit than before, particularly on riskier properties, the report shows.
A total of $US435 billion (£356.00 billion) of newly raised equity and debt is available to invest in commercial real estate, 2 per cent less than a year ago, Cushman said. For the first time the equity targeting real estate investments in the Americas exceeded Europe, the Middle East and Africa, as a result of the dollar’s strength, according to the report. Investors had consistently allocated more money to real estate since emerging from the global financial crisis as low interest rates diminished returns from government and corporate debt. Rising US interest rates and political uncertainty have now stemmed that tide.
“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,” Cushman & Wakefield researchers including Elisabeth Troni said in the 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.”