Nine out of 10 pension funds expect increased investment in residential real estate development

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

The survey with UK pension funds found that more than three in four (78%) believe the UK’s housebuilding target can only be achieved if institutional investors become more involved in funding.

Pension schemes recognize they have a role to play in meeting the growing demand for residential housing, according to the study, with 86% of respondents saying defined benefit schemes are playing a positive role in the sector.

Around four in five (80%) expected the government to announce initiatives to make housing construction easier over the next three years, with changes likely to further boost DB pension fund investment in the sector . Around 84 per cent of respondents believe the new rules will increase the attractiveness of property development for DB schemes.

However, the study showed that pension funds are already supporting residential housing development without any change – around 90% say it helps achieve ESG goals.

Downing Partner and Head of Specialty Lending, Parik Chandra, said: “Residential property development offers DB pension plans the benefits of attractive returns and long-term growth prospects, as well as supporting ESG objectives – research shows that this case is very well understood by pension plans. funds.”