Global real estate fund manager Hines has invested in a multi-family rental residential scheme in Madrid, on behalf of its new value-add fund.

The manager’s Hines European Value Fund (HEVF) 2 fund has signed a forward purchase agreement to buy the completed Valdebebas 125 project in the northeast of the city.

The 31,000sqm scheme of 395 apartments, expected to be completed in 2022, will be developed by Acciona.

Vanessa Gelado, Spain country head for Hines, said this transaction gives Hines an early entry into a nascent market in Spain benefiting from a demographic and lifestyle shift from homeownership to renting.

”At present, demand from the institutional investment community for well-located, high-quality purpose-built multi-family projects is significantly exceeding the volume of opportunities, so we are particularly pleased to have secured this asset.

 “The project enables us to leverage the Hines expertise in this sector, where we have delivered over 2.4m sqm of residential space globally, alongside our knowledge of the local Madrid market to ensure we first optimised all aspects of the project to deliver a scheme which meets demand and exceeds expectations of modern contemporary living in Madrid.”

The HEVF 2 fund raised €637m at the first closing in December 2019, exceeding 50% of the €1.25bn total fund target. With leverage, the fund is expected to have a €3bn purchasing power.

The predecessor HEVF 1 fund raised €721m in August 2018.

Paul White, Hines European Value Fund 2 fund manager, said alongside two further assets initial investments for HEVF 2 in Munich and London, the fund expects to execute transactions committing over €300m of the fund’s equity in the first quarter of 2020, with several more deals developing well.

”We’re very happy at the pace and quality of pipeline in this opening phase of the fund’s investment period.”