(Bloomberg) -- Zurich Insurance Group agreed to sell its iconic office building in downtown Madrid to a Spanish investment fund for about €100 million ($107 million), underscoring the robust demand for real estate in the city. 

Investment firm Besant Capital has made a binding offer for Edificio Zurich, located at Alcala 44 next to the Spanish central bank, according to people familiar with the matter, who asked not to be identified because the talks are private. Completion of the deal is expected in the coming days, the people said. Spokespeople for Zurich and Besant declined to comment.

Investors have flocked to Madrid, driving property prices to a new per-square-meter record in May. The Spanish capital has also posted some of the largest gains this year among major European cities. The trend is driven by a combination of housing shortages and demand from wealthy Latin Americans, transforming the city’s high-end market in recent years.

The real estate transformation is becoming especially noticeable in the hotel sector, with a boom in construction of luxury hotels. The Alcala 44 building occupies a prime location, and actor Roberto De Niro’s Nobu hotel is set to open in 2026 just a few doors down the road. 

European insurance companies, such as Zurich, are taking the unusual step to divest properties in response to pressure to rebalance portfolios as higher interest rates reduce the value of bond holdings. 

Besant Capital’s real estate investments have largely been focused on residential tourism and hotels — mainly in Mexico. Besant was co-founded by Mexican investor Jeronimo Bremer in March 2020, after he left real estate firm RLH Properties, which he co-founded, according to his LinkedIn page. 

During Bremer’s time at RLH, the company acquired and developed the five-star Villamagna Hotel in Madrid. The development is widely considered one of the main drivers behind the current surge in interest from luxury tourists and investors in the city.

--With assistance from Alessandro Speciale.

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