AMF agrees major hotel deal for Stockholm redevelopment

AMF Real Estate has unveiled what it says is the largest hotel contract in the history of Stockholm which will see two hotels developed at its mixed-use Urban Escape scheme.

The real estate arm of Sweden's AMF Pension has reached agreement with Petter Stordalen – owner of Nordic Choice Hotels - on the development of two hotels with two disparate concepts: business and boutique.

The hotels will cover an area of 30,000 m2 on a 20-year lease term and provide 540 rooms for the Urban Escape Stockholm development.

The 130,000 m2 Urban Escape project centres on the redevelopment of what AMF described as a 'forgotten' part of Central Stockholm, across the whole city block between Regeringsgatan and Brunkebergstorg.

The scheme will provide five properties, two squares and four streets in the district around AMF's Gallerian shopping centre. AMF said it is one most significant urban regeneration projects currently under way in a European Capital City, and will 'seamlessly integrate the wider business ecosystem of the Swedish capital'. Once completed, the development will comprise 62,000 m2 of central, modern, flexible office space and 38,000 m2 of retail and leisure in addition to the 30,000 m2 of hotel and conference space.

Nordic Choice Hotels was up against a line-up of over 60 different leading hotel operators to win the competitive contract. The agreement means that almost one third of the space available at Urban Escape Stockholm is now let. The hotels will include lounges, cafes, conference and co-working spaces, showrooms and permanent office space.

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Mats Hederos, CEO at AMF Fastigheter, said: 'After extensive analysis, we believe this combination of hotels, services and offices, integrated with a unique retail and leisure offer, will provide our investors with the best returns. It is the largest project we have undertaken and we are certain that it will safeguard our development pipeline for the future.

'With an average return of seven per cent in the last five years across all of AMF Pension’s investment streams, our property portfolio has produced returns of 6.6% and 7.2% in the last 10 and 20 years respectively – highlighting property’s effectiveness at balancing a capital portfolio.

Construction on Urban Escape Stockholm is scheduled to commence by the end of this year, with the hotels opening by early 2017.

Nordic Choice Hotels is one of Scandinavia's largest hotel operators with 171 hotels and 12,000 employees in Scandinavia and the Baltics.