FRANCE - A development subsidiary of the CAD152bn (€111bn) public pension fund manager Caisse de dépôt et placement du Québec is to invest in a major office development linked to the former Renault factory site regeneration on the edge of Paris.

Ivanhoé Cambridge, which has CAD30bn in assets under management, will invest an undisclosed amount in the Petra project to be built by US sustainable developer Hines, which is investing in the scheme on behalf of its HEDF Global fund.

The terms of the agreement have not been disclosed, although Ivanhoé Cambridge European head Meka Brunel described it as a partnership, "not a joint venture".

Brunel said the investment represented an opportunity to create value in a market otherwise characterised by low yields.

"If you're buying a building let at a low yield, you're not making money," she said. "We want to create value. As an investor who knows what development is about, it's part of our strategy." 

The former head of development at SITQ, another Caisse development subsidiary, will join Ivanhoe Cambridge in Europe to work on the project, scheduled for completion in 2013.

Brunel said Ivanhoé Cambridge had been attracted by the liquidity of the Paris office market, rather than the regeneration opportunity.

"Development has always been in the DNA of the company, though it's not the only vector of investment," he said.

"In this case, regeneration was an opportunity, not an objective. The goal is to catch the right opportunity at the right time at the right price."

In separate news, EPRA this week claimed that new tax rules for the French SIIC - a REIT equivalent - would likely deter investors despite its "reassuringly robust presence" in the market to date.

Chief executive Philip Charls told the SIMI real estate trade fair in Paris that mooted government plans to raise tax on foreign investors' SIIC dividends and abolish the tax exemption that encouraged investors to hold the structures within individual French pension plans would damage the government's ability to encourage investors to commit capital to the French property market in future.