EUROPE - Europe has seen the smallest decline in capital available for investment in commercial real estate over the past year, despite attracting relatively low levels of new capital, according to DTZ's 'Great Wall of Money' report.

The 3% decline to $108bn (€82bn) stands against a 9% global decline in capital available for investment in commercial real estate to $298bn, largely as a result of a 12% reduction in available debt.

Report author Nigel Almond said: "The relatively small fall in Europe no doubt reflects the difficulty funds are having in applying capital with relatively few investment opportunities and continued uncertainty as the sovereign debt crisis persists."

The impact of capital constraints is likely to be most felt by funds raised before 2009, now nearing the end of their investment period - especially the opportunistic funds that make up 55% of available capital at risk.

"Managers will seek to deploy this capital rather than return investors' commitments and endanger their core income," Almond said.

However, he added that these funds would find opportunities in the upcoming sales of European bank loan portfolios.

Almond and his team found that costly and less available debt had not deterred fund managers from raising new vehicles, although existing funds are likely to reduce the target gearing.

The report tracked funds seeking to raise $53bn in 2012, compared with $60bn recorded six months ago.

Despite the global decline in available capital, DTZ reported a slight increase in new capital from $30bn to $53bn.

North America, which saw a 5% decline to $108bn, still attracted the most capital - just.

Drawing on a database of 1,900 funds, Almond forecast that third-party funds would withdraw $160bn over the next year as fund managers struggled to deploy capital released.

"With close to 60% of capital available today having been raised since 2008, it is likely that some funds will not be able to deploy all the capital investors have agreed to provide," he said.

Globally, the firm estimates that $298bn in capital will be available for investment in 2012.

A further $31bn will be available for investment over the next few years - though only half of it for investment over the commitment period.