Cordea Savills, the real estate investment management business of London-based property services firm Savills, has held a first closing for its second London residential development fund, it has announced.
The firm, which manages approximately €9 billion of assets, said it had raised £33 million (€41.2 million; $53.2 million) for its Prime London Residential Fund (PLRF) II.
The vehicle will be used to invest in the development of mid-market central London properties – a segment it regards as having a supply-demand imbalance.
Investments will be made in developments that are expected to sell for between £500 and £1,250 a square foot. From these investments, Cordea hopes to provide for its investors an IRR of between 15 percent and 18 percent.
The capital for the first closing came from “a major bank based in Singapore” the firm said without revealing its identity. The firm hopes to corral up to £150 million in total for the fund over a number of closings over the next six to nine months.
The fund has been slated to run for four years with an option to extend for a further two years.
It has the capacity to use gearing when appropriate, Cordea said.
The previous PLRF fund was launched in June 2012 and ultimately was invested in five developments with a combined gross development value of in excess of £250 million.
Patrick Carr, the fund’s director, said: “Only around 22,000 new homes were completed in London last year, well below the target of 42,000 required to meet demand, with the most acute supply shortage in the mainstream market. The development opportunities offered by London make it one of the most exciting investment stories in the property sector at the present time.”
Brian D’Arcy Clark, head of residential acquisitions, added: “Over the past couple of years much of the attention has been on the prime postcodes – there is a bigger story to tell in Greater London where there is a greater shortage of stock, proven demand and a pool of talented developers seeking funding to address the balance”.