Developers are keen to start speculative schemes as land and construction costs continue to fall.

But the banks are fighting shy of lending cash to companies which could cause a drought in the development pipeline which will spell disaster for the industry and the wider economy.

Stock market quoted property giant Development Securities highlighted the problem yesterday during a rights issue.

The firm has seen an opportunity to snap-up stalled schemes as private developers struggle to raise cash and is building a war chest to take advantage of the situation.

The Enquirer has spoken to a number of developers hit by tighter policies among bankers.

For some the only funding avenue open is cash-rich foreign investors or private families.

The drawback is the eye-watering interest rates private lenders know they can charge in a shrinking market.

Horror stories of rates as high as 25% have spooked the development community and threaten to derail hopes of a new generation of projects.

Banks have tightened their lending procedures after getting their fingers burnt during the heady days of the property boom when it seemed like anyone with a sharp suit and a decent line in patter could walk away with a wheelbarrow of money.

Banking rules from Europe known as Basel II are also blocking speculative development.

The rules make it very difficult for banks to lend to commercial developers unless guaranteed tenants are in place.

The first credit crunch in 2007 had a devastating affect on construction and we must not allow a second wave to scupper any fledgling recovery.

The Government is fully invested in the private sector leading the way to a new economy.

It must do everything in its powers to free-up cash for reputable developers to employ the construction industry to build the vital infrastructure of tomorrow.