Private investment house Fleming Family & Partners is raising an initial $500 million for a new Russia real estate fund to focus on housing construction as building costs fall, its managers said.

"Now, at a time when all the construction companies have problems, prices have fallen and construction is genuinely cheap, we can go against the market," the manager of the new fund, Nikita Ivanov, said in an interview.

With a 15-year time horizon, the fund will focus on construction of mass market housing with a total area of 160 hectares, mostly in the regions.

In the regions, housing prices are lower than in the major cities, but construction is also far less expensive. Fleming said a total of $1 billion would ultimately be required, based on cost per meter of 15,000 rubles ($449.2) to 20,000 rubles.