Partners Group has signed a deal with Stockholm-based residential developer SSM to build more than 1,700 affordable apartments in the Greater Stockholm area.

The Switzerland-headquartered investment manager said the properties are expected to be worth over €700m.

Stuart Keith, vice president, private real estate Europe at Partners Group, said: “We are catering to a fundamental market need and look forward to adding a substantial amount of efficient, modern and affordable housing to the city’s real estate market.”

Stockholm has one of the fastest growing populations among European cities, but housing supply had not kept up with demand and there is now a big shortfall of residential units across the city, he said.

The three residential developments — Tellus Towers, Järla Station and Metronomen — are all located less than 15 minutes by train from central Stockholm.

They aim is to provide “small, but fully-functional residential units at an affordable price”, Partners Group said.

The largest project, Tellus Towers, will include two high-rise residential towers, a hotel, retail space and a preschool over a total floor area of 57,000sqm.

The tallest tower will be one of the highest residential buildings in Northern Europe, at 78 stories, Partners Group said.

The three developments are expected to be finished between 2019 and 2021.

Partners Group said European housing was one of its main areas of focus due to demographic shifts and urbanisation.

“To address rising population densities and higher rents and land prices, cities like London, Frankfurt, Berlin and Stockholm are moving towards the adoption of smaller, more efficient forms of housing,” said Mike Bryant, Partners Group’s managing director and co-head private real estate.

“This development project fits squarely within this trend.”