Jones Lang LaSalle to launch first real estate fund

BANGALORE/MUMBAI: Property consultancy firm Jones Lang La-Salle (JLL) India has set up a new entity JLL Segregated Funds Group to raise funds to invest in the Indian real estate market, and its first fund worth 300 crore will be launched soon in the domestic market.

Capital market regulator Securities & Exchange Board of India (Sebi) has approved the proposed fund, which will be a close-ended one with a six-year tenure, according to media reports.

"It is the first one among a series of funds that we are planning to launch in the next few months. The proposed fund will focus on city-centric residential projects with shorter cycles and high-equity returns," Mridul Upreti, CEO, JLL Segregated Fund Group told Economic Times.

Though the fund will be looking at investments based on opportunities, the focus will be on residential projects in tier-I cities. It will be aiming to fetch internal rate of return of 20-25%, and the average investment size is likely to be around . 25-30 crore.

The property consultant is in the process of appointing distributors and other intermediaries for the fund-raising exercise. JLL, a global real estate property consultancy firm, offers services like leasing, buying office space or investing in the Indian real estate space. Globally, LaSalle Investment Management, an independent subsidiary of Jones Lang LaSalle, manages $46.7 billion (as of Q2 2012) of private and public property equity investments, which invests only in real estate.

There are over half a dozen realty-focused funds like ICICI Prudential AMC - a joint venture between ICICI Bank and Prudential Plc of UK - JP Morgan Asset Management, Reliance Portfolio Management Services, ASK Property Investment Advisor, IDFC and IL&FS that are in the market to raise fresh or follow-up funds to deploy in the real estate sector.

However, raising capital from limited partners has become much trickier, with private equity funds now being forced to show their deal pipeline in order to raise funds.

Private equity investment in the real estate sector has slowed down in the first half of 2012. There have been 29 real estate investments estimated at $1.04 billion (Rs 5,500 crore) this year, a 72% drop in cumulative deal value from 2011, which saw 87 deals worth $3.9 billion, according to research firm Venture Intelligence.

Bigger residential property markets such as the Mumbai metropolitan region and the National Capital Region fell by 60% to 15.98 m sq ft and 57% to 28.86 m sq ft respectively in the first quarter of FY2013, while the demand for commercial properties across India's seven largest cities fell by 21% in the first half of 2012, compared to a year ago, the report fruther added.