Residential development funding is bucking the trend of a decline in overall real estate lending, research claims.
Analysis by real estate adviser Sirius Property Finance said overall lending in the sector fell 23 per cent amid the pandemic last year but residential development has held up well.
Real estate lending in the UK fell from £43.6bn in 2019 to £33.6bn in 2020, according to Sirius Property Finance.
Despite this decline, lending that focused purely on the financing of new real estate developments, rather than remortgages or commercial property, rose 6.9 per cent to £9.3bn in 2020.
This accounted for 27.7 per cent of total property lending, compared with 19.9 per cent in 2019.
“While the residential housing market has soared to new highs during the pandemic, it’s fair to say that commercial real estate has taken the brunt of Covid-19’s negative impact due to the spectre of working-from-home mothballing offices and numerous lockdowns curtailing the viability of high streets, bars, and eateries,” Nicholas Christofi, managing director of Sirius Property Finance, said.
“However, the huge exception remains the residential real estate development funding space as we’ve seen this expand significantly despite hesitation in other areas of the industry.
“It’s been a difficult couple of years overall, but optimism is clearly in the air and lenders are increasingly more confident that financing new developments is a reliable and worthwhile investment.”