CBRE Global Investors has attracted close to £250m (€319m) from UK institutional investors for its debut social and affordable housing fund.

Hannah Marshall, head of UK funds, said the open-ended vehicle was believed to be “the first of its type in the market”.

The CBRE UK Affordable Housing Fund has held a first close with 13 institutional investors, including social investment institution The Big Society Capital.

The fund will invest in social and affordable rented housing, shared-ownership properties, homeless hostels and housing for ‘key workers’, such as nurses.

It is designed to make a social impact while targeting a 6% total return, which Marshall said would meet investor requirements.

“Our strategy contributes towards our investors’ ESG targets and generates a positive social impact as we invest in the funding of homes for those households unable to afford to rent or buy in the open market,” she said.

CBRE Global Investors will partner with registered providers, which will manage the assets and will be responsible for the rental income, maintenance and property management.

“We’re not looking to be in competition with housing associations,” said Marshall. “We are working with them to achieve the social income outcomes that they seek, and that we seek as well.”

Impact investing is gaining traction among institutions, and a number of investors and real estate fund managers are exploring the opportunity to address the lack of social and affordable housing in the UK.

Late last year, the Co-op pension scheme awarded a £50m mandate to PGIM Real Estate to invest in social and affordable housing. 

In December, Legal & General Affordable Homes, which launched in April 2018, was granted registered provider status, helping push Legal & General’s affording housing initiatives.

In November, a fund launched by the social impact investment company Resonance in conjunction with homelessness charity St Mungo’s raised further capital.

Earlier in the year PfP Capital, the fund management business established by Places for People Group, launched a £150m fund in partnership with the Scottish Government to invest in mid-market rent properties, offering affordable housing to people on low and modest incomes.

While there is growing interest in impact investing among institutional investors, one of the biggest questions is how to measure and assess performance of social impact.

CBRE Global Investors said it was “seeking to develop a robust, market-leading framework” in relation to affordable housing investments. The fund manager is working on the initiative with The Big Society Capital and social advisory firm The Good Economy.

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