Downing LLP

Property developers focusing on ESG drives pension fund investment

New research by Downing LLP has found that property developers’ increasing focusing on ESG will make the sector more attractive to pension funds and institutional investors.

The investment manager commissioned a study with UK pension funds, 86% of which agree that more attention on ESG by property development finance companies will lead to a rise in institutional investment.

Pension funds have seen property developers place more emphasis on ESG, with 76% of survey respondents expecting this trend to grow over the next three years.

Around 20% predict this tendency to increase dramatically.

This latest study supports a growing willingness by institutional investors to invest in illiquid assets due to the potential of premium yields, a trend which 24% of pension funds anticipate will heighten dramatically.

Commenting on the report, Parik Chandra, partner and head of specialist lending at Downing LLP, said: “ESG is increasingly a key factor in decision making for property development finance companies, as well as pension funds and institutional investors.

“The increased focus on ESG by property developers helps them raise finance and is good news for pension funds and institutional investors who have ESG targets to address.”

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