A Spanish real estate company has reportedly raised €680 million for a new €1.5 billion fund to invest in “sun and beach” hotels around the Mediterranean.

The funding initiative targeting leisure travel was flagged as a sign of confidence that Europe’s struggling tourism sector will soon recover.

The disclosure by the Financial Times came against a backdrop of fears of mass cancellations of overseas holidays after the government’s decision to quarantine arrivals from Spain just hours before it took effect on Sunday.

Madrid-based Azora raised €80 million more than its initial goal from investors including Asian and Middle Eastern sovereign wealth funds, APG — one of Europe’s largest pension fund investors — and another large institutional fund, according to people with knowledge of the backers involved.

The remaining capital will come from debt taken out at the time that assets are secured.

The fund is one of only a few in Europe to specifically target hotels and the only one focused solely on leisure travel.

Cristina García-Peri, Azora’s head of corporate development, said: “There is a very strong mega trend of leisure, and people spending more and more of their income on leisure.

“If anything we think Covid[-19] will bring more opportunities and some better prices, so there might be additional opportunities because of the state of the industry.”

APG declined to comment.