Jones Lang LaSalle has launched its second real estate fund aimed at the Indian commercial property market and is hoping to attract at least Rs 600 crore [£57m] from investors.
The fund, to be managed by the property consultancy’s investment arm Segregated Funds Group, hopes to raise the majority of its cash on the domestic market before turning to overseas clients, and will focus on investing in leased commercial assets across major office property markets in India. The company is planning to launch the fund after the Indian general elections in mid-2014.
Segregated Funds Group is a new investment vehicle established by the firm to invest in India’s property market, which has suffered as a result of slowing economic growth and the global financial crisis.
The international real estate services firm recently closed its maiden Rs 161 crore [£15.5m] real estate fund, Residential Opportunities Fund I, which concentrates on the country’s residential sector. “The fund’s focused investment approach is based on seeking value-added returns from inherently lower risk strategies. A significant portion of the capital has been raised from a combination of individuals, institutional investors and family offices,” said Mridul Upreti, chief executive of JLL’s Segregated Funds Group.
Its latest close-ended fund will target leased office properties in commercial centres in India, including the Delhi-National Capital Region, Mumbai Metropolitan Region, Bangalore, Pune, Hyderabad, Kolkata and Chennai. “This is an important milestone for the group as it has reinforced belief in our strategy and we are now in a position to harness a significant market opportunity,” added Upreti.
Despite the problems in the Indian real estate market, private equity players are keen to invest in the sector, especially in the commercial market with its continued low property prices.
Last month the Mumbai-based IIFL Private Wealth announced it had raised £70m to invest in Indian real estate. And in November, the Singapore state investment fund, GIC Pte Ltd, also confirmed it was joining Ascendas Pte to invest as much as £282m in sub-continent commercial property.
Indian property values have dipped during the past three years and are only now starting to pick up with the renewed attention of global investors. The momentum of deals in the commercial sector is also likely to gather pace with a change in law to allow the establishment of Real Estate Investment Trusts (REITs), something new to the Indian property market.
