Aberdeen Property Investors has launched a €1.5bn (£1bn) fund to invest in Russian property.

The Aberdeen Eastern European Russia fund is the company’s first fund focused on Russia and is part of a growing tide of investment in the country. Aberdeen is aiming to raise €500m of equity for the Luxembourg-listed 10-year closed-ended fund.

It will invest in a diversified portfolio of commercial property with an initial geographical focus on Moscow and St Petersburg. It will target returns of between 14% and 18% a year and investor dividend returns of between 5% and 8%.

The fund, which can use leverage of up to 70% of the value, will mainly focus on the office and retail sectors. The initial offer period for the fund starts on 1st October and the first closing will be in the fourth quarter of 2007

Aberdeen Property Investors is the property division of Aberdeen Asset Management which is listed on the stock exchange and manages over €13bn (£9bn) assets. Its Eastern Europe arm, which has its head office in Copenhagen, opened an office in St Petersburg in August this year.