Canada Pension Plan Investment Board (CPPIB) and Longfor Group Holdings have extended their partnership with a new US$817m (€699.2m) Chinese rental housing venture.

The C$356.1bn (€231bn) Canada Pension Plan said the new cooperation will invest across tier-one and core tier-two cities via developments, acquisition and master-lease of commercial assets to be converted into rental housing.

Jimmy Phua, the managing director and head of CPPIB’s real estate investments in Asia, said: “Demand for modern, quality rental housing amongst young professionals and new graduates in China is growing rapidly, and through this collaboration, we are pleased to have the opportunity to participate in this fast-growing sector of Chinese real estate and to further diversify our investments in the market.

“We look forward to extending our partnership with a well-established and experienced operator like Longfor Group, particularly as we embark on our first dedicated rental housing investment in China.”

Zhao Yi, an executive director and CFO at Longfor Group, said: “Our cooperation with CPPIB continues to go from strength to strength, following on from our successful investments in retail malls and mixed-use sites in Suzhou, Chongqing, Chengdu and Shanghai.

“The strategic cooperation in long-term apartments shows CPPIB’s recognition of Longfor Group’s development and operational capabilities.”

CPPIB and property developer Longfor launched their collaboration in 2014.

The partnership has built a portfolio of Paradise Walk branded retail assets beginning with their first investment in a mixed-use real estate project in Suzhou and extended that co-operation with further investments in ChongqingShanghai and Chengdu.