POLAND - First Property Group has returned to its previous business model of launching successive Polish opportunity funds, having concluded its mandate with the Universities Superannuation Scheme (USS).

The fund manager has established the Fprop Opportunities fund with a view to investing in commercial property in Poland and potentially in the Czech Republic, Slovakia and Romania.

It continues the series of five Polish funds raised between 2000 and 2005 after a period of several years investing in Poland on behalf of the UK pension fund.

USS has said recently it would focus on the UK real estate market, and First Property confirmed the pension fund was now fully invested and had made no indications it wanted to expand its exposure any further.

Ben Habib, chief executive of First Property, said: "We got the USS mandate in 2005, and that kept us pretty much entirely busy in Poland exclusively for that mandate. So we have gone back to what we used to do."

As with previous funds, First Property will co-invest in the new vehicle, committing £7m (€8m) at the outset and guaranteeing its investment will not fall below 7% of the fund's issued share capital.

The fund manager hopes to raise in the region of £100m of equity from investors, but in the meantime will commence business immediately with the £7m.

"We want to get cracking, and we've a couple of properties we want to buy straightaway," Habib said. "We will raise new money for the fund as we do deals."

He added: "The standard way to raise a fund is to go out, raise the capital and then invest it. But it is so difficult doing that nowadays that we stand a much better chance achieving our goals simply by getting cracking, proving what we can do and allowing people to buy into what we've got."

Last year, First Property began raising capital for its first UK real estate fund following a four-year tactical absence from the market.

But the opportunistic fund manager is now backing Poland as providing one of the best real estate investment opportunities in Europe.

"The Greek debt crisis created a certain degree of uncertainty, but Poland has done extremely well in a very difficult environment," Habib said.

"It is really the massive strength of the Polish economy that has drawn us toward wanting to buy more property in Poland."

Poland is Europe's sixth largest economy, the only country not to have entered recession during the financial crisis, and is forecast by the European Commission to grow by 3.4% in 2010, the highest forecast growth rate within the European Union.

But Habib admitted he had seen a lack of interest from western European institutional investors, with the exception of German and Austrian institutions that have been active in Poland.

"We would ideally raise a blind pool of cash as we did for the USS fund and the UK fund, but there isn't that much institutional interest, and we are sad about that," he said.

"One would totally sympathise with the view during the very volatile credit crunch years that no one knew what was going on anywhere. But we've undoubtedly got through the worse of the credit crunch."

He added: "A country like Poland is actually going to do very well coming out of this global recession - investors should be getting in now before prices rise and the opportunity is gone. But getting people to move at the right time is often quite a difficult thing to do."