Swedish pension fund AMF has signed a deal with Nordic Choice Hotels to construct two hotel buildings in central Stockholm with 540 rooms and nearly 30,000sqm of space, in what it says is the biggest hotel contract in the city’s history.

Mats Hederos, managing director of AMF’s property arm AMF Fastigheter, said: “We received a visionary proposal that we could not resist. 

“Together with Petter Stordalen (Norwegian owner of Nordic Choice Hotels) and Nordic Choice, we will develop a more vibrant quarter and create higher returns which will benefit our pension savers.”

A spokesman for AMF Fastigheter declined to say how much the hotel contract was worth.

The project is part of the larger development project in the city announced in May, called Urban Escape Stockholm.

Urban Escape Stockholm involves the development of 130,000sqm of hotel, office, restaurant and retail space between Hamngatan, Regeringsgatan and Brunkebergstorg in the centre of the Swedish capital. This overall project involves five buildings, four streets and two squares.

The hotel deal with Nordic Choice includes a boutique hotel and a business hotel. The business hotel will have a 2,000sqm conference facility, gym, fitness centre and spa attached, and the both hotels will have restaurants, cafes and bars. The two-hotel development will also include a 1,200sqm rooftop restaurant.

AMF is working with several partners in the Urban Escape Stockholm project. It is developing Brunkebergstorg in cooperation with the City of Stockholm and Stena Property, and Regeringsgatan in conjunction with Vasakronan, Pembroke and the City of Stockholm.

Construction work on Urban Escape Stockholm is set to go on until the spring of 2018, having begun this summer.