Cordea Savills is launching the Prime London Residential Development Fund to capitalise on opportunities created by the development 'funding gap'. The vehicle - which is targeting an IRR of 18-20% per annum - will have a target size of £250 mln (EUR 285 mln) with the first closing scheduled for January 2012.

The fund will provide finance through discounted forward commitments, development equity funding in joint ventures with preferred development partners, and the provision of mezzanine finance. It will target opportunities in prime London locations where Cordea Savills' research indicates maximum potential for capital growth during the development period.

The fund will have a term of four years with the option to extend by a further two years.

Prime London locations targeted by the fund include Mayfair, Kensington, Chelsea, Fulham, Knightsbridge, Belgravia, Notting Hill, Holland Park, Marylebone, Regent’s Park, St. John’s Wood and Hampstead.

'This proposition provides the opportunity to capitalise on the current development funding gap as well as benefitting from the strong capital growth forecast in the prime London residential market during the life of the fund,' said Patrick Carr, director of Investment.