The Canada Pension Plan Investment Board (CPPIB) has formed a new venture with China Vanke Co., the largest residential developer in China.
Through this venture, the CPPIB will, over time, invest US$250 million ($279.2 million) in the Chinese residential housing market.
The venture will focus on new residential development projects in large cities across China, where there are rising incomes and strong economic fundamentals. It is expected that these factors will provide significant demand for middle-income housing. Vanke will be responsible for sourcing projects for the venture.
To seed the venture, the CPPIB and Vanke are investing in a project located in Qingdao, located about 700 kilometres southeast of Beijing.
“We see this as an excellent opportunity to expand our presence in the country and invest in the residential sector alongside Vanke, an experienced and market-leading developer with a proven track record of delivering high-quality homes to China’s ever-growing middle class,” says Graeme Eadie, senior vice-president, real estate investments, for the CPPIB. “Asia continues to be an important real estate market for CPPIB and one where we already have significant investments in the commercial property and logistics sectors.”
Founded in 1984, Vanke is the largest residential developer in China with revenues of more than US$22 billion ($24.6 billion) in 2013 and has developments in 65 large- and medium-sized cities across the country and four overseas cities.
At Dec. 31, 2013, CPPIB’s investments in Asia totalled $23.4 billion representing 11.6% of the total portfolio, including $4.2 billion of real estate investments.