Debt financing has become difficult, and will continue to be so for the foreseeable future, JLL has noted in its latest European Capital Markets bulletin.

Loan origination and CMBS has fallen to exceptionally low levels and is taking longer to recover than first thought. In the UK, recent Bank of England figures revealed that bank lending to real estate fell by £16 bn over Q4 2010 - the largest reduction in absolute terms since the series began in 1987.

Yet in the absence of the banks, the funding environment has started to change with investors utilising increasingly innovative partnerships in order to mitigate risk and access funding.

Some institutional investors are taking more control of their real estate portfolios, using direct investment and joint venture (JV) deals as opposed to third-party fund managers and their real estate vehicles. Notable examples of this type of activity include APG and Canada Pension Plan Investment Board’s purchase of a 50% stake in Westfield Group's Stratford City and Hammerson' s sale of a 51% stake in a French shopping centre to the South Korean National Pension Service.