Canada Pension Plan Investment Board (CPPIB) and Cyrela Brazil Realty have teamed up to invest R$1bn (€220m) to develop a portfolio of residential properties in the southeast region of Brazil.

CPPIB will own an 80% interest in the newly formed joint venture, which will develop assets across select neighbourhoods in the city of São Paulo to target the middle-to-high-income segments of the multifamily market.

Residential property developer Cyrela will own the remaining 20% interest and will manage the properties acquired and developed by the joint venture.

Announcing the venture, the companies said four development projects have so far been identified as an initial selection of assets to seed the joint venture, with three already secured by the platform.

This will give CPPIB and Cyrela’s partnership immediate scale in the market and account for 56% of the joint venture’s target equity allocation, the companies said.

Hilary Spann, CPPIB managing director and head of Americas real estate investments, said: “CPPIB expects the multifamily sector to particularly benefit from an improvement in São Paulo’s local business activity and consumer confidence levels, supporting long-term demand for modern, high-quality residential space.”

Rodolfo Spielmann, CPPIB managing director and head of Latin America, said: “This joint venture with Cyrela gives CPPIB the ability to access a developing asset class in Brazil alongside a strong, aligned partner.”

Efraim Horn, co-CEO, Cyrela, said: “Cyrela believes Brazil’s current macroeconomic conditions, aligned with changes in consumer preferences and the lack of multifamily projects owned entirely by institutions, presents a unique moment for this kind of investment in Brazil.”

As at the first half of the year, CPPIB – which manages the C$400.6bn (€274.6bn) funds of the Canada Pension Plan – had C$16.4bn invested in real estate, public equities, private equity funds and direct investments in Latin America.

The manager entered the Brazilian residential market in October 2013 and opened its office in São Paulo in 2014 to serve as the hub office for Latin America.