LaSalle Investment Management has raised £120m (€165m) for its first UK private-rented sector (PRS) property fund.

The investment manager said it is aiming to invest more than £500m in the residential market for clients through the fund and other investment vehicles.

LaSalle is targeting both income-producing and new-build assets.

Andrew Stanford, UK residential fund manager, said the firm expects “continued strong demand” for PRS in the UK.

“Growing demographic pressure and a shortage of supply is driving housing requirements and we expect significant growth,” Stanford said. “Returns in UK PRS compare favourably with core commercial real estate.”

The investment manager’s head of UK, Alan Tripp, said the firm has a “long-term ambition” of having 10-15% of its UK assets under management in the build-to-rent sector.

Speaking at a recent PRS event in London organised by LaSalle, Stanford said the company has a “visible pipeline of build-to-rent schemes”.

The company, which this year invested £60m in a 292-unit build-to-rent scheme in Aberdeen, has hired Savills as property manager for its UK portfolio.

While few deals have transacted, Stanford said there was now more evidence of engagement by institutional investors as other real estate sectors became over-priced and impenetrable.

Stanford – who, before joining LaSalle earlier this year was head of the UK government’s now disbanded PRS taskforce, added: “Yes, we’d like to have seen more schemes coming out of the ground, and there was frustration with the planning process.

“The industry is supportive of the sector, but the biggest challenge now is winning the hearts and minds of council officials and the electorate.”