There was one word in the air at this year's Expo Real conference in Munich, says Richard Lowe, and that word was 'debt'.

The word on nearly everyone's lips at Expo Real was 'debt'. Most of the discussions in Munich were about how to get hold of it or how to make money out of it.

Perhaps this year's record attendance (38,000 versus 37,000 in 2011) had something to do with the fact that Germany today is probably the best place to source financing.

"Germany is the most liquid," says Andreas Quint, head of corporate finance at Jones Lang LaSalle (JLL), referring to its debt market. France and UK, the next two most active markets, are described as "dry". In many other countries, debt is simply unavailable.

The same can be said for individual properties. Where there is debt available, it is only interested in the same small universe of quality assets in the same locations. Swathes of buildings up and down the Continent are non-financeable.

Gargantuan numbers are routinely quoted in reports and market commentaries in an attempt to convey the magnitude of the funding gap in Europe. For those with troubled legacy assets, it makes for uncomfortable consumption, for those sitting on equity - pension funds, for example - it is food for thought.

It is always easy to generalise. But Ari Danielsson, managing director at Reviva Capital, had a point when he questioned why the cash-rich institutional investor community was not positioning itself more to be part of the solution and generate returns in the process.

Reviva specialises in bank workouts and distressed situations, and Danielsson sees plenty of private equity firms looking to take on non-performing loans. But their high return requirements mean the bid-ask spread is still too high. Perhaps less aggressive institutional capital with longer-term investment horizons have a role to play here. But, Danielsson bemoaned, the end-investors - the pension funds and similar institutions - seem one step removed from the picture.

AEW Europe's opportunistic outfit could be grouped into Danielsson's private equity category. Russell Jewell, head of private equity funds, said his firm was not looking to pay "50 cents on the dollar" but complained that banks' prices were too high.

The company is hoping to raise €350m for a new pan-European opportunity fund (its three existing vehicles are past their investment phases), and Jewell says US investors are beginning to look at Europe as a land of opportunity rather than a perceived wasteland. Nine months ago, he said, most US investors were scared Europe would collapse in on itself; today their view has sobered somewhat.

Joe Valente, head of research and strategy for European real estate at JP Morgan Asset Management, mentioned something similar. Most investment officers buy into 'opportunistic Europe' as a strategy, but they will invariably struggle to get it past their investment boards when so many negative headlines about Europe's dire macro situation circulate.

Valente was optimistic, however. He cited his own gargantuan numbers: €450bn in distressed European real estate assets requiring recapitalisation, of which €250bn would be of interest to institutional investors. He estimated the capital chasing the latter figure to be around a quarter in volume, leading to a 4:1 ratio of assets versus buyers. "What does this tell me?" he says. "It tells me the market is coming towards me." In other words, prices will come down.

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