France's Bouygues Development and UK listed residential landlord Grainger have announced the creation of, and their co-investment in, a new Build-To-Let fund targeting residential assets.

The fund will provide institutional investors with the opportunity to invest in scale into the private rented sector which to date has been relatively inaccessible. It has a dedicated portfolio of purpose built PRS development sites in London and South East of England, expected to provide over 1,000 residential assets on completion.

The assets will be developed and built out by Bouygues in phases over around three and a half years, with construction expected to begin in Q1 2012 and the first units expected to be completed in Q4 2013. Bouygues will manage the investment and construction process, while Grainger will undertake the operation of the portfolio after completion, including property management, lettings, facility management, and fund and asset management.

The fund has been created with an eight year life, with an option to extend it by up to three years. Bouygues and Grainger will co-invest into the fund upfront, and seek additional equity investment from institutional investors, totalling up to £150 mln (EUR 172 mln).

The companies said that the Bouygues & Grainger Fund is designed to capitalise on the appetite of UK and overseas investors to put long-term money directly into residential property in London and the South East. It is also aligned with the UK Government's plans to increase the number of new homes being built, and the Housing Minister's public land initiative, they added.

'Today's announcement is a major step toward creating a large scale, attractive and accessible private rented sector in the UK, for both investors and tenants alike,' said Nick Jopling, executive property director of Grainger, and long-time advocate of purpose built residential building in the UK.