Shortage of homes sees surge in development finance projects

The surveyor is currently working with projects totally more than £2bn of development funding for the first time, ranging in value from £750,000 to £150m.

Blane Perrotton, managing director, Naismiths, said the primary driver of the UK development market remains the shortage of residential homes, along with the fact international investors particularly active given the weakness of Sterling since the Brexit referendum.

Perrotton said: “The shortage of homes, and the opportunity this represents, is driving the development market forward, with residential making up almost two thirds of the projects we are monitoring at present. London, Bristol, Birmingham and Manchester are by a distance the UK’s development hot spots, as investors set out to meet the extremely high demand for housing in these cities.

“Inflows of international capital have been particularly strong over the past year, in large part because of the weakness of Sterling. But with the Pound starting to strengthen given the messages emerging from Threadneedle Street, we are noting even more interest from overseas investors who sense the tide is starting to turn against them.”

Nigel Bowers, national BDM for UK Property Finance says the market is also being driven by “a very active group of property lenders who understand the market and are willing to make commercial decisions to get the deals done”.

He added: “We work with the full cross section of lenders and have strong relationships with firms such as Masthaven, United Trust Bank, Amicus, Paragon (and many more) all of who provide good support to the broker network and have a strong appetite to lend.”