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Jones Lang LaSalle selects Bangalore for its first India fund deal

The Economic Times

BANGALORE: Global property consultant Jones Lang LaSalle will be making its first real estate investment from its maiden India-focused fund in Bangalore, a development that indicates a cautious return of risk capital to the country’s beleaguered property market.

The transaction, which will be made by Jones Lang LaSalle’s Segregated Funds Group, will look to invest about .`30 crore in city-centric luxury residential projects, according to a person with direct knowledge of the transaction.

“Jones Lang LaSalle 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, requesting anonymity.

The maiden investment will be made from Segregated Fund Group’s first six year, close-ended fund, which has a corpus of about Rs300 crore, and which received approvals from market regulator SEBI last year.

Jones Lang LaSalle declined to comment. Segregated Funds Group is a new investment vehicle created by the real estate consultancy firm to invest in India’s property market, which has been hit hard by the country’s slowing economic growth and the global financial crisis.

“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,” the source said.

Luxury housing has caught the market’s fancy with nearly $2 billion (over Rs10,800crore) worth of projects launched across the country in 2012, at a time when overall housing segment has continued to see a general slowdown.

“There is an appetite for luxury housing projects currently, depending on the right valuation. Bangalore is a natural corollary for the same, given the amount of job creation taking place in the city, which has led to an uptick in commercial real estate, which has again led to significant improvements in residential market,” pointed out, Manish Kashyap, MD – transaction services at CB Richard Ellis.

Globally, LaSalle Investment Management, an independent subsidiary of Jones Lang LaSalle, manages $46.7 billion (as of second quarter of 2012) of private and public property equity investments, which invests only in real estate.

The private equity participation in the space plunge by more than 50% to $463 million in 2012, compared to 2011, according to Venture Intelligence.