Almost nine in 10 (86 per cent) UK pension funds expect investment in residential property development to increase over the next five years and 18 per cent have forecasted a dramatic increase, new research from Downing has revealed.

The study with UK pension funds found more than three out of four (78 per cent) believe the UK’s target for housebuilding can only be met if institutional investors become more involved in funding.

Pension schemes recognise they have a part to play in meeting the growing demand for residential housing, the research found, with 86 per cent of those surveyed saying that DB schemes play a positive role in the sector.

Around four out of five (80 per cent) expected the government to announce initiatives to make housebuilding easier over the next three years, with changes likely to further boost DB pension fund investment in the sector. Around 84 per cent of those questioned believe new rules will increase the attraction of real estate development for DB schemes.

However, the study showed pension funds are already supportive of residential housing development without any changes – around 90 per cent say it helps meet ESG goals.

Downing partner and head of specialist lending, Parik Chandra, commented: “Residential property development offers DB pension schemes the benefits of attractive yields and long-term growth prospects as well as supporting ESG targets - the research shows that case is very much understood by pension funds.”

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