NEW YORK CITY-Private equity fund managers are increasingly facing illiquidity within the capital markets, leaving few able to secure bank financing for commercial real estate projects, according to "Global Market Outlook: Trends In Real Estate Private Equity," a new report by Ernst & Young.

The report -- based on a survey of 300 global real estate funds -- shows that deployment of capital by private equity funds has slowed down largely because of the Eurozone crisis and the uncertainty it has brought to markets around the world, including emerging economies like Brazil and India. However, the one exception is Russia, where domestic banks continue to fund transactions and new development despite their already high exposure to real estate, providing local investors with the means to execute transactions, says E&Y.

"The still tough global financing market has had a dampening effect on real estate funds but there have been other challenges too, most notably in the significant structural and cultural changes funds are having to navigate coming out of the recession,” says Mark Grinis, global real estate fund practice leader at E&Y.