JLL arm plans Rs 300-cr realty fund to invest in top 7 markets
MUMBAI | BENGALURU: Property consultancy firm JLL India’s investment arm JLL Segregated Funds Group is raising Rs 300 crore through its Residential Opportunities Fund II to invest in housing projects across top seven property markets of the country . The fund will focus on buying nearly ready apartments in bulk at a discount from developers and may lease them before selling in the open market, said a top company official.
This is the second fund of JLL India’s investment arm and it has raised Rs 150 crore so far including first closure at Rs 120 crore. The fund has already started negotiating deals in Bengaluru, Pune and the Delhi-National Capital Region.
“We will focus on the middle income housing projects in top seven property markets for deploying the fund. However, for now we are seeing good opportunities emerging out of Bengaluru, Delhi-NCR and Pune, where we hope to conclude deals in the next few months,” said Mridul Upreti, chief executive, JLL Segregated Funds Group, India. “We believe there is great value in the rental housing market, given the current property prices and lack of institutional players in this segment.”
The total tenure of the proposed fund, which would be under Alternative Investment Fund category II, will be for five years, and it will invest in residential projects through equity and high yield mezzanine deal structures.
In 2013, the global real estate services firm had concluded raising its maiden real estate fund, Residential Opportunities Fund I, worth Rs 161 crore. The fund has been fully committed through eight transactions ad has so far made two exits from the same.
Recently, JLL Segregated Funds Group exited completely from its first investment made through this maiden fund clocking a 30% Internal Rate of Return in two years.
The fund had invested Rs 24 crore in a middle-income residential project of Bengaluru-based Assetz Property Group in February 2014.
It has also made a partial exit from another middle-income housing project in Chennai being developed by the Plaza Group. In 2014, the fund had invested Rs 20 crore in this project and has achieved partial exit with Internal Rate of Return of 28% over two years. With this, the fund has returned over 30% of the money it had raised within the first three years of total six years of the fund’s total tenure.
The revival in interest among private equity investors, especially in real estate sector, witnessed over the last one year is continuing into this year as well. Both domestic as well as foreign institutions have been looking to invest in the property market. Several Indian private equity players have been raising capital from global investors to invest in various sectors including real estate.
Foreign private equity players have a large appetite for commercial office space as it comes with lower associated risks and higher yields, whereas domestic players appear to be betting big on residential projects of reputed developers.