Thats a loaded question. Go check out the Coral Propagation section in this forum for more information. People have made frag tanks out of rubbermaid containers from Wal-Mart, and some do full scale amazing eye catching frag tanks.
Let me throw you my .02 which may only be work .01 but here goes. It depends on what you want to propagate? softies, SPS, zoas, xenia... the list goes on and on.
If you want fish in the prop tank then LR would be needed as well as a skimmer, which would be good anyways.
You will need to cycle the tank because when you put your first frag/ coral in there it will begin the cycle which may kill the coral.
Also going back to the basics, SPS and other corals need more light while mushrooms and misc. other corals don't. So figure out what you want to propagate and work around it. Or set up your prop tank so that it will work for most corals.
Lighting isn't everything, water quality, water flow, stability and general aquarium maintence is a must as well as regular water changes.
OK its late and I am rambling on and on.
I hope I helped
-Matt