M&G Real Estate has made a €98 mln forward funding commitment to a residential development in Bilbao, in a move to capitalise on the undersupply of quality housing in Spain.
The 29,000 m2 development was acquired on behalf of M&G’s European Living Property Fund, launched earlier this year with around €600 mln of investment, and marks its first deal in Southern Europe. Spanish developer Urbas was the vendor.
The project is located on Zorrotzaurre Island, a former industrial area which has been transformed into a mixed-use district with an electric tram network, extensive office, leisure, cultural and academic facilities and an abundance of green spaces.
Designed by the late architect Zaha Hadid, the peninsula has been regenerated into a new flood-proof ‘island’ which also provides for a significant quantity of affordable housing and development opportunities for non-polluting businesses.
The residential development comprises 314 private rental apartments split across two buildings of 15 and 17 floors. The project is targeting an EPC ‘A’ rating and ‘Very Good’ BREEAM certification and will be ready for occupation at the end of 2026.
Marcus Eilers, head of European residential at M&G Real Estate, said: ‘This is the fund’s third deal since launch and sees us diversify into Southern Europe following acquisitions earlier this year in Finland and Ireland.’
He added: ‘There is strong demand for high-quality living space across Europe and we are building on our commitment to provide homes which have a positive impact on their surrounding communities. We are actively looking at further opportunities across Europe where we can finance similar projects which will deliver best-in-class living space and help to provide resilient returns for our investors.’
According to M&G, around two million new homes are needed in Spain, of which around 140,000 are required in the Basque Country. Bilbao leads household growth in the region, with more than 23,000 new households expected to be created in the city in the next 15 years.
