Knight Frank puts off plan for India-focused property fund

Knight Frank puts off plan for India-focused property fund
Business Standard, August 14, 2009, Page 3

Raghavendra Kamath / Mumbai

The UK-headquartered Knight Frank Group has put on hold its plans to launch a $250 million (nearly Rs 1,225 crore) India-focused real estate fund due to drastic slowdown in property markets across the world, said informed sources.

“The group is relooking at launching new funds in international markets,’’ said a person in the know.

When asked, Knight Frank India Chairman Pranay Vakil confirmed the development. The offshore fund was supposed to raise investments from high net worth individuals and other investors from the UK.

Last year, the group held discussions with potential investors and started putting in place a management team to run the fund. Knight Frank India executive director Keku Cola was expected to head the new fund, but he has quit and joined the Shapoorji Pallonji group.

According to a report by global research firm Preqin, private equity real estate funds are still struggling to raise capital in the current economic environment. In the April-June quarter, 21 real estate funds made aggregate commitments of $10.3 billion, down 72.16 per cent from the $37 billion in the year-ago period.

The interest from private equity funds has waned due to slowdown in the sector in the past nine months. Only three PE deals, worth Rs 600 crore, have taken place in the realty sector in the past nine months, as against Rs 40,000 crore worth of deals during the same period in 2008, according to Venture Intelligence, which tracks venture capital and PE investments.

Knight Frank India has been operating in the country for the past 12 years and has offices in Mumbai, Gurgaon, Pune and Bangalore, among others. With its US-based real estate partner, Newmark Knight Frank, the global network encompasses more than 165 offices in 36 countries across six continents. It handles $36.1 billion of real estate assets.