​Institutional investors plan to increase allocations to UK housing

Institutional investors are increasingly recognising the “significant role” they can play in meeting housing building targets in the UK and plan to boost funding levels, according to research from investment management and business finance firm Downing.

The study of UK institutional investors responsible for around £405.6bn of assets found that 50% strongly agree that institutional investment is central to delivering UK residential property building targets, while another 48% slightly agreed.

Downing’s survey of private and public-sector pension funds, family offices and insurance asset managers also revealed that investors expected increased funding for residential over the next five years.

More than one in five (22%) forecast a dramatic increase in the level of funding that institutional investors provide for UK residential property between now and 2028, while 72% forecast a slight increase.

Mass market ’for sale’ residential housing is the property type seen as most likely to attract institutional money, as it is regarded as the best investment opportunity in terms of returns, the study found.

Around 60% of respondents identified mass-market residential housing as the most attractive investment opportunity followed by 27% who identified affordable housing as offering the best opportunities. Twelve per cent highlighted single family rental properties while 3% chose later-living housing and 2% said they were targeting multifamily rental property.

Parik Chandra, partner and head of specialist lending at Downing, said: “Institutional investors are aware of their significant role in assisting the UK to reach its targets for residential property development, and they are reinforcing this recognition with plans to increase their funding in this area.

“The focus of these investors on mass-market residential housing aligns with Downing’s experience. We have observed a notable uptick in institutional investment in this sector compared to last year and expect this upward trend to continue.”

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