US-based property consultants CB Richard Ellis (CBRE) and Jones Lang LaSalle(JLL) could soon follow international property consultant Knight Frank in launching a third-party realty fund in the country.
The Indian arm of CBRE is looking at raising Rs 250 crore for its maiden third-party property fund in India, said a source. CBRE is looking at tapping some large high net worth individuals (HNIs) for the domestic fund, which will have a Rs 500-crore corpus, he said.
“Most offshore investors are not interested in investing in Indian real estate and domestic funds have lesser restrictions. That may be prompting CBRE to look at domestic funds,” the source said. “Fund management is not a new area for CBRE.”
However, when asked, Anshuman Magazine, chairman and managing director of CBRE (South Asia), denied the firm was launching a fund of its own. “We are in the business of advising funds. We are strengthening our capital markets team and looking at advising more and more funds,” he said.
Internationally, CBRE Global Investors is one of the largest realty investment managers, with $ 94.1 billion in assets under management.
Jones Lang LaSalle, CBRE’s rival globally, has also planned a domestic fund launch of Rs 250-300 crore by year-end, said another source. According to him, the consultant is in the process of obtaining approvals and finalising the nitty-gritty.
Globally, LaSalle Investment Management, the realty investment manager of JLL, manages $47.7 bn of assets under management.
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In 2010, the UK’s Knight Frank, along with Anand Rathi Financial Services, raised Rs 220 crore for a rental yield fund. This has done a couple of deals in Mumbai and Pune and is in the process of launching a new fund.
“It (the third party fund management) is a good annuity model and you can show a good deal flow,” said Amit Goenka, national director, capital transactions, Knight Frank India.
Fund managers such as Sunil Rohokale, managing director, ASK Investment Holdings, say realty funds floated by property consultants should maintain a distance from their other advisory activities. “Although entry of such players is a welcome move, they have more responsibilities towards keeping an arm’s length from their business of advising real estate developers and funds in buying and selling properties,” he adds.