Real estate survey 2012: New players keep old lenders on the sidelines
Traditional lenders and private equity investors continue to slash exposure to all but the safest assets. But alternative providers of finance are growing their books and locking in attractive yields.
Traditional balance-sheet lenders have accelerated their withdrawal from commercial real estate senior debt, leading to a greater concentration of available capital on core markets such as the UK, France and Germany.
"We have seen continued retrenchment from traditional lending banks, and real estate debt is now relatively scarce. Indeed, a few of the traditional banks have become more overt about their lack of appetite; we’ve seen more names announce that they are not focused on real estate," says Eric Adler, senior managing director and head of Europe with Pramerica Real Estate Investors in London.
Add in the continued uncertainty around where economic growth will come from in 2013, and it’s not surprising that real estate markets are flat.
According to Real Capital Analytics, which tracks global real estate transactions larger than $10 million including multi-family apartment buildings and development sites, commercial real estate volume totalled $306.3 billion for the first half of 2012, down some $100 billion on the same period last year. "Every property type except for apartments posted a drop in volume compared with a year ago."