Third of institutional investors report reduced appetite for investing in high-rise developments due to the Building Safety Act

One in three institutional investors have said their appetite for investing in development of buildings over 18 metres has reduced as a result of the Building Safety Act (BSA), a survey has found.

Asset manager and financier Investec surveyed 50 institutional investors globally representing £300bn of assets under management.

The findings, published in a report called Future Living, shed light on the way BSA’s provisions are being seen by investors.

When asked how the BSA has impacted on real estate activities from an investment perspective, only 8% said there had been no significant impact, with 92% choosing impacts from a list of options.

A total of 36% said the introduction of the act has reduced appetite for building developments over 18m.

More than half, 54%, said the enhanced safety requirements of the BSA had led to extended project deadlines, while 48% said they had affected returns.

The survey also asked respondents how strongly they agreed that political uncertainty in the UK is undermining the UK’s appeal as a commercial real estate investment destination. Three quarters (76%) agreed or strongly agreed, with 24% disagreeing. Six in 10 investors also agreed UK property “risks losing its competitiveness as a global investment hub” without faster interest rate cuts.

>> See also: Is the Building Safety Regulator’s plan to tackle the backlog likely to succeed?

The BSA has brought in new duties to ensure high-rise residential buildings are safely designed, constructed, and managed throughout their lifecycle, placing clear legal responsibilities on developers, building owners, and managers.

Residential buildings over 18m in height are deemed to be ‘higher-risk’ and are subject to greater controls, including the need to gain pre-construction gateway 2 approval with the Building Safety Regulator.