Agreed deals stymied by lack of finance

The 'usual suspects' are monitoring real estate markets in Europe for investment opportunities, but the main question is who has the ability to carry out deals in the current climate, a panel discussion on the first day of the Mipim international property fair in Cannes heard on Tuesday.

Petra Blazkova, an associate director within Jones Lang LaSalle's European research team, said the 'usual suspects' included German open-ended property funds and big German institutions. Other panelists said that the notion that sovereign wealth funds (SWFs) would intervene massively in the market was not realistic. Insurance companies, pension funds and private equity funds as well as high-net-worth individuals were also cited as potential buyers.

But Olivier Elamine, CEO of Alstria Office REIT, said lack of finance was a major hurdle. 'There is as far as I am concerned barely any investment market at the moment,' he noted. The lack of debt financing rather than a pricing mismatch between potential buyers and sellers was the key problem, Elamine said. 'Deals in which the owner and buyer have agreed a price are not being executed as there is no bank available to finance the deal.'

Another panelist, Ian Gleeson of CBRE Investors, agreed that market conditions were such that it was difficult to identify where buyers may come from. 'The market is relatively flat. People are saying why buy now as the assets may be cheaper tomorrow,' Gleeson said. He said some market 'clear-out' with owners and creditor banks accepting lower prices to close deals was probably needed, and there have been some signs of this happening so far this year.