CPPIB to Invest $250M in Residential Venture with China Vanke

Canada Pension Plan Investment Board (CPPIB) announced this week that it has formed a new venture with real estate developer China Vanke, to invest US$250 million in new residential project in China.

The venture between China’s largest property company and the pension fund that manages Canada’s retirement accounts will focus on new residential development projects in large cities across China, where it plans to build middle-income housing in communities with strong economic fundamentals, according to a statement from CPPIB.

The first project by the new company will be a development in the coastal city of Qingdao, in China’s Shandong Province in China.

Graeme Eadie, Senior Vice-President, Real Estate Investments for CPPIB, said, “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.”

The investment by CPPIB is part of an ongoing interest in Chinese real estate, as confirmed by the CPPIB official. “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,” Eadie added.

In July last year, the pension fund had invested an additional $500 million into an existing partnership with Australia’s Goodman Group, which focuses on China’s logistics market. As of December 31, 2013, CPPIB’s real estate investments in Asia totalled US$3.75 billion.

Founded in 1984, Vanke is the largest residential developer in China with revenues of over US$22 billion in 2013 and has developments in 65 large- and medium-sized cities across the country and four overseas cities. To date, Vanke has developed over 500,000 residential units and provides property management services to over 400 residential communities.