GLOBAL – European institutional investors remain cautious on US commercial real estate despite indications the market's fundamentals are improving, according to a report by Neuberger Berman.

The asset manager's survey found that US real estate investment trusts (REITs) raised more than (€70bn) in equity over the past five years, generating an average dividend-based yield of 3.4%.

Brian Jones, a fund manager at Neuberger Berman, said: "This improvement in their balance sheet makes us confident they can weather possible storms in future."

He said his company had seen "strong interest" by institutional investors worldwide in US commercial real estate, but added that European interest had only been "improving gradually".

"There is much stronger interest from Asian institutional investors, and, last week, a Chinese institution announced it was investing in the General Motors building here in New York, one of the highest profile, most expensive office building in the US," he said.

In Europe, Jones said, high net worth investors are generally more keen on the US than institutional investors, which scaled back activity in the market "almost to zero" in the wake of the financial crisis.

But he said he expected interest from all institutions to increase, pointing to a growing expectation that interest rates will gradually move higher in the US.

He said he was certain REITs could "endure" a rate increase, as most had been able to refinance balance sheets over last three years to a long-term fixed rate.

Jones also cited low levels of new construction in the commercial sector as another cause for optimism – particularly in California, where vacancy rates have fallen.

German real estate company Deutsche Hypo also recently saw "clear signs of revival" in the US real estate market continuing into 2013.

In its latest international market report, it said: "The shortage of first-class office buildings is leading to a noticeable stimulation in construction activity."

It added that slightly positive economic growth had boosted the retail market, but that retailers remained cautious when it came to renting larger assets.

The asset manager also confirmed that vacancy rates were "on their way down".