Jones Lang LaSalle to Launch Second Indian Property Fund

Global property consultant Jones Lang LaSalle is planning the launch of a second property fund in India, according to a media report.

After launching its maiden Rs 300-crore private equity fund in India focused on residential properties late last year, Jones Lang LaSalle (JLL) is now considering a second one in its Segregated Funds Group – a new investment vehicle created to invest in India's property market which has been hit hard by the country's slowing economic growth and the global financial crisis, a Business Standard report suggested.

According to inside sources, the new Rs 1,200 crore (£173.2 million) property fund will be launched by the end of 2013 and will focus on office properties.

The newspaper quoted one of these sources as saying: “The fund will focus on corporate real estate and target higher returns […].” Jones Lang LaSalle is also studying opportunities for launching property funds in retail and hospitality sectors, the source added.

Besides US-based Jones Lang LaSalle other major international property advisers have also launched or are in the process of launching India-focused property funds. UK-based Knight Frank has set up a rental yield fund with Bangalore-based Anand Rathi Financial Services, and was planning to launch a second realty fund last year. US-based CBRE Group was also looking at a third party domestic fund to invest in Indian properties.

The Economic Times reported last month that Jones Lang LaSalle will be making its first real estate investment from its first India-focused fund in Bangalore – a move indicating a cautious return of risk capital to the country's beleaguered property market. The company will look to invest about Rs 30 crore in city-centric luxury residential projects, the newspaper said, citing information obtained from an inside source.

"JLL has identified three to four sites in Bangalore, and is currently in the final stage of discussions with two real estate developers to develop the project. They are bundling four sites onto a single platform to develop a luxury housing project", the source said, adding, "Jones Lang LaSalle is betting big on the Indian residential real estate market, and Bangalore's eco-system is being seen as one of the best for private equity in India.”

Luxury housing projects worth nearly $2 billion in total were launched across India last year, at a time when the overall housing segment continued to slow down, the report pointed out.