The managers of the M&G European Property Fund have announced the acquisition of two more northern European assets in response to increased investor demand for funds with exposure to core, well-let property assets in the region.

The fund has purchased the 7,200-m2 Burlöv retail warehouse in Malmö, Sweden, from NCC Property Development as well as the Marktkauf hypermarket in Rinteln, Germany with a combined value of more than EUR 30 mln.

The locations reflect institutional investors' appetite for northern European property, as well as their wariness about property in southern Europe, said David Jackson, co-fund manager of M&G European Property Fund. 'There remains a stark north-south divide in terms of performance and risk appetite. Funds with Northern exposure continue to appeal to investors seeking a reasonable level of return as well as diversification benefits.'

The fund was launched in 2006 with a mandate to invest in mature European markets outside the UK and grown in size to around EUR 625 mln. In the last 12 months inflows have totalled more than EUR 200 mln from UK and European investors.

He added: 'There is a striking increase in investment from European investors keen to diversify from their domestic markets and from UK investors who additionally believe that the European market is still recovering. As inflows come in we will continue to buy selectively, tending to focus on defensive assets in Germany, Scandinavia and France.'

Prupim, the real estate fund management arm of M&G, provides asset and investment management services for the fund.