UK - Cordea Savills is to unlock development projects held up by a lack of available credit with a fund targeting prime London residential.
The fund, which is targeting a £250m (€180m) war chest and an annual return of as much as 20%, will invest in multiple funding structures, including forward commitments, development equity in joint ventures and mezzanine debt.
Patrick Carr, investment director, said: "If you can unlock schemes halted by the funding gap, it puts you in a strong position [for discounts]."
Cordea Savills bases its positive outlook for prime residential on comparative capital growth outperformance over a 20-year period, and on global demand and supply constraints that have contributed to London prime's 'safe haven' status.
Overseas investors have accounted for an estimated 53% of prime residential acquisitions in the capital over the past two years, rising to 76% for assets valued at more than £10m.
The fund will also include existing assets with potential for refurbishment.
"It's fair to say that residential has the strongest supply and demand imbalance in the London market," said Carr.
"The UK market isn't particularly keen on residential - wrongly because it outperforms.
Residential will come more to the fore in terms of the opportunities it provides for investors. It should be on investors' radar screens."
Although Carr acknowledged the fund would be taking on additional development risk, he said most risk would stay with developers themselves.
"Relationships with our development partners are strong," he said. "In fact, it should give investors an additional comfort because the joint-venture partners are also co-investors," he said.
He said the fund manager would borrow "prudentially".
The fund has a 60% gearing cap.
