Union Investment has made its latest move into the German residential sector by entering a partnership with housing specialist ZBI Zentral Boden Immobilien.

The German investment manager is taking a 49.9% stake in ZBI Partnerschafts-Holding, which will target self-contained residential units, for an undisclosed amount.

Union Investment will look to increase its stake in the partnership with the family-owned firm over time.

Union Investment said it plans to add residential real estate to its existing range of open-ended real estate funds.

“Demand from retail and institutional clients for residential real estate funds is high,” said Hans Joachim Reinke, chief executive of Union Investment.

“That is why we have decided to build up our specialist knowledge of residential real estate and to start doing business in this area.

“The expertise of the ZBI Group and that of Union Investment complement each other perfectly, and we share the same values.”

The move follows the awarding of a mandate to Deutsche Asset One to invest in German residential property late last year.

Deutsche Asset One, a Dupuis Investment & Asset Management company, is setting up an open-ended fund with an initial €170m to invest.