(Yicai Global) Dec. 12 -- US private equity giant Warburg Pincus and its Chinese partner, Hande Group, plan to set up a joint venture to invest in distressed assets in China's real estate market. 

The two parties have agreed to establish a corporate joint venture to pursue special situations investments in real estate projects, the companies said in a joint statement today.

With stricter financial regulation and improved laws and provisions on non-performing loans or distressed real estate business, the sector is expected to move into a fast-growth stage, spawning a lot of non-performing real estate investment opportunities, the statement said.

The JV's total commitment will be USD1 billion and targets assets under management of USD5 billion within the next three years, the statement said, adding that the unit aims to become one of the leading investors and owners of property in China.

It will explore opportunities to potentially introduce third-party investors, to set up real estate-focused special situation funds and act as a fund and property manager.