Former AIG chief Hank Greenberg’s Starr International has teamed up with Letterstone Group, the London-based fund manager, for a €1bn (£791m) European property investment venture. Financial Times

Letterstone and Starr International have created a Netherlands-based investment company called LS Real Estate Ventures, which will be used as a vehicle to buy real estate developments in Hungary, Slovakia, Romania and Ukraine.

The pair will invest about €250m - although most of the equity will come from Starr International - into the venture, which will create an acquisitions and development war chest of up to €1bn including bank debt.

The new venture comes against a backdrop of falling property values in many parts of Europe, although countries in the east have not seen the same sort of falls as in western regions.

The fund will look to buy mostly land, or property with redevelopment potential, which Letterstone will then develop into new commercial buildings.

This is seen as generating a higher income than simply acquiring existing property.