JLL mulls Rs 1,200-cr realty fund for office properties

After launching a Rs 300-crore private equity fund late last year, US-based property brokerage Jones Lang LaSalle (JLL) is looking at a new realty fund in India, which will be four times the size of the first one.

While its maiden Rs 300-crore fund was focused on residential properties, the second one from segregated funds group of JLL will focus on office properties and have a corpus of Rs 1,200 crore, sources said. The fund is expected to be launched by the end of this year. While the first fund was domestic, no decision has been taken yet on whether the next one would be offshore or home-bound.

Senior executives of JLL were unavailable for comments. The fund will tie up with select research institutes and educational institutions to bring out one or two white papers on specific research for its investors.

“The fund will focus on corporate real estate and target higher returns as we are looking at significant value addition  from their side,” said one person aware of the development.

JLL's first fund is close to investing in a Bangalore housing project, according to reports. The segregated funds group is also studying prospectus of launching funds in retail and hospitality sectors.

“The funds business can do funds in all sub sectors in real estate. The first fund had smaller corpus as they were looking at Rs 25 to Rs 30 crore deals in city-centric, smaller projects,” the source said.

Though JLL made its foray into fund management last year, globally, LaSalle Investment Management, a subsidiary of JLL, manages funds worth $46.7 billion (Rs 2.50 lakh crore). JLL is not alone as most big international property consultants (IPCs) have launched or are in the process of launching property funds.

UK-based Knight Frank has already launched a rental yield fund with Anand Rathi Financial Services, and was planning to launch a second realty fund of around Rs 500 crore last year.

US-based CBRE was also looking at a third party domestic fund to invest in Indian properties.

“International property consultants advise a lot of realty funds directly or indirectly and service many high net worth investors. Hence, it is a natural extension for them,” said Pranay Vakil, former chairman of Knight Frank. “There is inherent conflict of interest. That’s why the funds are never sponsored by IPCs and aspects such as valuation are outsourced.”