M&G Real Estate, part of M&G’s private markets business which has assets under management of EUR 93 billion, has acquired two serviced apartment properties in Berlin and Bielefeld. The transaction, completed via a forward purchase, is for the M&G European Property Fund, which has assets under management of EUR 5.2 billion, and totals EUR 73.5 million. These acquisitions mark the fund's initial foray into the serviced apartments segment in Europe.
The properties were developed by Livory, a German real estate developer specialising in build-to-rent properties and serviced apartments. The serviced apartment segment has seen increased demand since the pandemic. Reasons for this include changed travel habits and the need for flexible accommodation solutions in a mobile working environment. The segment addresses a broad user group, including business travellers, project staff, relocation clients, commuters, and tourists.
Given the limited supply in many markets, the sector benefits from robust long-term fundamentals. Serviced apartments are positioned at the intersection of the residential and hospitality asset classes, providing investors with access to two structurally attractive real estate segments. Long-term leases with established operators enable inflation-linked returns, defensive investment characteristics, and diversification of cash flows within the portfolio. Both properties will be leased to smartments, a sister company of Livory and an established operator of serviced apartments in Germany, for a period of 20 years.
The Berlin property in the Prenzlauer Berg district comprises 183 fully furnished apartments. The revitalisation was completed in April and included the installation of external sun protection, heat pumps, modernisation of the cooling system, and redesign of apartments and the lobby. The property achieves an EPC-A rating and aims for a BREEAM-In-Use certification in the “Very Good” category.
The property in Bielefeld is a new build with 221 fully furnished apartments and a commercial unit on the ground floor. It is scheduled to commence operations in February 2026. It is located directly at the main railway station and is within walking distance of the old town and the shopping street. The building was constructed to a high energy efficiency standard, completely refrains from using fossil fuels, and is supplied with heat via a district heating network. A DGNB Gold certification and an EPC-A rating are being sought.
Simon Ellis, Fund Manager of the M&G European Property Fund at M&G Real Estate, stated that this transaction represents the fund's first step into the serviced apartment segment. He emphasised the dynamism of this market in Europe, particularly in Germany, driven by catch-up potential, robust operational performance, and increasing interest from institutional investors. He also pointed to the structurally limited supply. For investors, he said, it offers the opportunity to participate early in a relatively small but rapidly growing market segment at the intersection of residential and hospitality in Europe's cities. Berlin and Bielefeld have fundamentals with supply shortages, positive rental development, and high occupancy rates, creating good conditions for long-term growth in the segment.
Simon Behr, Managing Director at Livory, confirmed the high demand from institutional investors for modern serviced apartment concepts in Germany. He highlighted Livory's expertise in developing high-quality properties with ESG standards and attractive locations as a key success factor for the transaction, which forms a solid basis for the long-term performance of the properties.
