The Canada Pension Plan Investment Board is committing more than $1 billion to building two office towers in Australia, a project which it is calling its largest investment in a single real estate asset to date.

CPPIB says it will develop and co-own the Barangaroo South Project in Sydney through a joint venture with Australian project developer Lend Lease Corporation and the Australian Prime Property Fund Commercial, which is managed by Lend Lease.

CPPIB is committing 50 per cent of the equity for the project, or $1.04 billion, with the other two companies committing 25 per cent each.

The project is also CPPIB's first direct office investment in Australia.

The project will be a new extension of the Sydney Central Business District. One of the waterfront towers will be 41 floors high while the other will have 38 floors. In addition to offices, the towers will also have retail space.

They are expected to be completed in 2015.

CPPIB says "under certain circumstances," the joint venture may also develop a third tower at the same location in the future.

"This is an excellent opportunity to invest in a high quality, iconic commercial waterfront real estate development alongside Lend Lease, one of the region's top developers and APPFC, an aligned, local institutional partner," Graeme Eadie, CPPIB's senior vice-president for real estate investments said in a statement.

"This investment supports our real estate strategy to acquire premium, long term assets in key global markets."

CPPIB said that at the end of March, its real estate portfolio totalled $17.1 billion of which approximately $1.7 billion was invested in Australia.