An estimated €250 billion of equity capital held by property and institutional investors, sovereign wealth funds and German open-ended funds is primed to invest in opportunities in the European real estate market.
A report by Property Week, with research by Richard Ellis, revealed that taken together institutional investors, property funds and the listed property sector account for 76 percent, or €190 billion, of the capital targeting the European real estate market. Institutional investors and unlisted property funds – such as private equity real estate vehicles – together account for as much as two-thirds of property ownership in Europe, according to the report.
Meanwhile, sovereign wealth funds are sitting on €40 billion of capital, or 16 percent of the total, while German open-ended funds have €20 billion in capital to direct to the market.
Additionally, approximately €30 billion is comprised of “recovery funds” looking to take advantage of the repricing taking place in Europe, the report said, with a number of fund managers launching such funds at the beginning of 2008. These funds are using a high percentage of debt, it added, with average leverage of up to 65 percent debt. However there has been little investment activity among these vehicles.
Despite the fact that property values and transactions have taken a hit, the report concluded that there has been plenty of equity capital amassed and primed to target opportunities in the European real estate market. The report added though that many were still waiting on the sidelines to see how far property values will fall.