Moorfield Group, on behalf of its Moorfield Real Estate Fund IV, has agreed to forward fund the 81-bed co-living scheme on The Mall for £21 million.

The transaction is the first investment by a joint venture between Moorfield and Funding House (the “Zennor” partnership), offering experienced developers in the UK ‘Living’ sector the opportunity to enter into forward funding agreements with an experienced and well-respected investment partner. A co-investment mechanism permits developers to generate additional returns through the increased value of assets anticipated following operational stabilisation.

Urbane London, the specialist, London-focused residential developer, will act as the development manager.

The Squire & Partners-designed scheme is expected to complete in late 2023.

It will offer 81 high-quality en-suite studios across a range of unit types, alongside 1,800 sq ft of amenity space including a south-facing roof terrace, co-working space, kitchens and storage for 83 bikes. The BREEAM Very Good scheme has strong environmental and social credentials including an air source heat pump, photovoltaic panels, no gas services, a biophilic design, and a private rooftop for residents to aid wellbeing.

The opportunity in the London co-living sector is supported by rapid population growth and a chronic shortage of housing, with the Mayor of London’s Strategic Housing Market Assessment identifying the need for 66,000 additional homes per annum in the capital.

Ross Netherway, Head of Origination at Moorfield Group, said: “Increasing demand, underpinned by a growing youthful population and exacerbated by housing undersupply and limited affordability, underpins our conviction in the nascent London co-living sector. This acquisition is fully aligned with our strategy of pioneering investment in sectors benefitting from demographic and societal change, and will deliver a high quality, amenity-led rental product with strong sustainability credentials, in one of London’s most dynamic and well-connected submarkets.

“We are also excited to be partnering with Funding House, pairing our proven investment expertise with experienced and reputable developers in the living sectors capable of delivering sustainable and future-proofed schemes. At the same time, the partnership’s co-investment structure offers developers the opportunity to generate attractive additional returns and ensures all parties are aligned in delivering the highest quality rental product and service to residents.”

Tim Attlee, Founder of Funding House, commented: “We are excited to be partnering with Moorfield, who have a long and successful track record of investing in the UK with entrepreneurial partners. This transaction marks our entry into the co-living sector and we expect this to be the first in a significant series of similar investments for the joint venture in the UK ‘Living’ sector.”

Holly Porter, Founding Director of Urbane London, said: “We are excited that the Ealing site has been chosen as the first investment of the Zennor partnership. Between Moorfield and Funding House there is a wealth of experience, and a proven track record. We believe the scheme will showcase the absolute best of what co-living can be. Our aim has been to create sustainable, high-quality homes and socially permeable communities, with design quality at the heart.”

Moorfield was advised by Shoosmiths.