Development finance loans increased by 140% between 2012 and 2014 with over £4bn transacted in 2014 alone.
The figures come from a survey of 35 lenders for the International Property Forum.
The survey found that the value of development finance leapt by 37% between 2013 and 2014 as more lenders became willing to lend on development projects.
Banks remained largely constrained to lending on largely prelet or presold schemes, with alternative lenders more likely to lend on speculative projects.
Alternative lenders were, however, more London-centric than their bank peers who, for the right sponsor, were willing to finance more regional projects.
The number of non-UK banks involved in the market is also increasing. The sector lent 64% more in 2014 than it had in the previous year and hoped to increase development lending by 73% in 2015.
UK lenders were more willing to finance smaller projects than overseas lenders, which targeted larger office retail and industrial assets.
Both were lending in the same loan-to-cost ratios, at around 50-70%, with margins of between 245bp and 315bp over Libor.
While alternative lenders expressed a desire to increase their lending by 50% in 2015, the IPF estimates that to achieve this the debt funds will have to reduce their IRRs in many cases.
In all cases, small developers will struggle to find finance for projects, with few of those surveyed saying they were willing to finance them.
Kate Gimblett, consultant economist and author of the report for the IPF, said: “My survey-based research is an effort to throw some light on what is usually an opaque area of the real estate market. There is a continual flow of information on finance for standing real estate assets but very little research has been done on UK development in recent years. Both lenders and borrowers will hopefully get some benefit from the increased transparency this report provides.”
