M&G European Property Fund enters serviced apartment sector

Acting on behalf of its €5.2 bn European Property Fund, M&G Real Estate has completed a forward purchase of two serviced apartment assets in Berlin and Bielefeld for €73.5 mln.

MG Berlin Prenzlauer Berg

This transaction marks the Fund’s inaugural entry into the European serviced apartment sector. The properties were developed by Livory, a German specialist in BTR and serviced apartments.

M&G cites the sector's strong post-pandemic growth—outpacing traditional hotels—as a primary driver for the investment. Serviced apartments benefit from shifting travel trends and increased demand for flexible housing from a mobile workforce, appealing to a wide demographic of short- and extended-stay guests. With supply constrained in many markets, the sector offers attractive long-term fundamentals. Positioned between the living and hospitality asset classes, these properties provide defensive characteristics, inflation-linked income via long-term leases to established operators, and portfolio diversification.

The Berlin asset, located in the desirable Prenzlauer Berg district, comprises 183 newly refurbished, fully furnished apartments with strong transport links. Completed in April, the refurbishment prioritized sustainability, featuring heat pumps, upgraded cooling, and new interiors, resulting in an EPC A rating and a target BREEAM In-Use ‘Very Good’ certification.

The Bielefeld property is a new development adjacent to the main train station and within walking distance of the city center. Operational since February 2026, it features 221 fully furnished apartments and one ground-floor commercial unit. The building boasts high energy efficiency standards, utilising district heating with zero on-site fossil fuel consumption, and is targeting DGNB "Gold" certification.

Both locations have been leased on 20-year terms to smartments, an established German serviced apartment operator and sister company to Livory.

This acquisition continues a period of robust activity for the Fund, which has finalised or agreed to over €1.6 bn in acquisitions across core European cities in the last nine months.

Simon Ellis, manager of the M&G European Property Fund at M&G Real Estate, commented: “This transaction marks our debut into serviced apartments – a sector which is gaining strong momentum across Europe, and particularly in Germany, supported by catch-up potential, solid performance and rising investor interest. Despite this momentum, the sector remains structurally undersupplied, offering an attractive opportunity for investors to tap into a still relatively small but expanding segment of the living and hospitality market across Europe’s key gateway cities. Both cities present compelling fundamentals, underpinned by supply-demand imbalances, strong rental dynamics and solid occupancy levels, supporting the serviced apartments sector’s long-term growth prospects.”

Simon Behr, managing director at Livory, commented: "This transaction confirms institutional demand for modern, high-performing serviced apartment products in Germany. Livory's expertise in the conception and development of assets with high-quality standards, clear ESG credentials, and prime locations was a key factor for the transaction and laid a solid foundation for the future performance of the properties."