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M&G buys €148m Finnish resi assets in European expansion

Helsinki [Photo: Tapio Haaja/Unsplash]

M&G European Property Fund has acquired a €148 million portfolio of 11 residential assets in Finland.

The portfolio comprises 630 apartments built to high environmental standards. Five assets were ready for occupation at the end of 2020 and the remainder will be completed this year.

Eight of the eleven properties are in the Helsinki region, the others are located in Tampere, Turku and Hämeenlinna, Finland’s oldest inland city. The portfolio is 73% studio or one-bedroom apartments, to cater for the under-supply of in the market, M&G said.

The firm explained in a statement that the deal was part of its strategy to increase its exposure to the residential sector in continental Europe and the Nordics.

While 10 of the assets were bought from ÅB Kodit, a joint venture between Ålandsbanken Housing Fund and YIT, one scheme was bought directly from Ålandsbanken Housing Fund.

M&G stated that population projections mean that Finland will need 760,000 new homes by 2040. Most demand will be in Greater Helsinki and Finland’s other large cities where there is a shortage of energy efficient, modern living space.

Rents in the larger cities have risen by up to 21% over five years, with smaller apartments in particular demand.

Strong rental growth is anticipated, particularly in the second and third largest cities of Tampere and Turku, M&G said. These cities have large university populations and a focus on research and development.