Private equity’s European land grab by @FortuneMagazine December 17, 2012, 10:53 AM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons The Carlyle Group bought the property at 88 St. James’s St. for $54 million. FORUNE — The Blackstone Group has raised a dedicated $4 billion European real estate fund; David Abrams, head of European real estate investment for Apollo Global Management, says his firm has made 30 investments this year in the U.K., Germany, Ireland, and Spain; the Carlyle Group is buying mainly in Northern Europe, which includes Sweden, Norway, Germany, France, and especially the U.K. — isn’t Europe supposed to be shaky ground in which to invest? What gives? MORE: 20 best places in the world to launch a business Well, there are deals to be had. European banks, bloated with real estate, have been looking to dump their holdings — the International Monetary Fund estimates that 58 European banks will sell at least $2 trillion in assets over the next two years. (By contrast, the S&L mess in the U.S. in the 1980s forced the sale of only about $400 billion in assets.) Ken Caplan, head of European real estate for the Blackstone Group BX , says that this is still the most desirable market for global investors, especially high-profile London office buildings. Spain is creating a “bad bank” to take over about $117 billion in nonperforming real estate loans that have been weighing down balance sheets all over Madrid. Spanish banks have been reluctant to sell the assets at a loss because it would erase their capital, but the bad bank will probably sell them at market clearing prices. MORE: The Fortune Global 500 Still, even distressed assets ain’t cheap. Abrams says that U.S. firms are getting bargains because they have to invest in big infrastructure on the ground, using dedicated teams in each country, including experts on credit and the real estate market, which can be dramatically different from country to country. Traditional investment banks are noticeably absent from this land grab. It seems they have less appetite to invest in distressed debt. This story is from the December 24, 2012 issue of Fortune.