Over £7.5 bn (EUR 8.8 bn) is aimed at residential development and/or investment in the UK from a variety of domestic and international funds, CB Richard Ellis has revealed. Around 70% of this money is earmarked for inner London broadly split between prime (£2.5 bn) and fringe (£2.8 bn).

Investors can realise high returns in excess of 20% on equity employed and there has been a noticeable £1 bn pick-up in the level of potential residential investment funds over the past quarter, which can almost entirely be attributed to funds targeting prime central London (PCL), CBRE said.

Consented schemes that will sell to owner occupiers and buy-to-let investors are the investor’s choice, reflecting a perceived security of return with an underlying inherent demand.

The level of investment available for residential stock could make a significant difference to current levels of house building. For example, the £5.3bn allocated to fund residential schemes in inner London could, in theory, support the building of around 9,500 units.

Most of the monies originate from UK-based funds but around a quarter comes from North America with opportunity funds making up the largest category of investors, closely followed by pension funds.