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A luxury housing project at the heart of the Nine Elms site in London has been sold by its debt-laden Chinese developer for a £62m loss.
R&F Properties has offloaded the Vauxhall Square site, which has planning permission for two large office buildings and twin 42 and 58-storey towers that will have a total of 578 apartments when completed.
R&F will sell the south London site for a nominal £1, transferring £95.7m of debt to Hong Kong rival Far East, according to the terms of the agreement. The sum is about 42pc lower than the project’s market value.
As part of the deal, R&F has a six-month option to repurchase the project from Far East for £106.6m.
Martin Wong of property agents Knight Frank told the South China Morning Post that it was "one of the biggest losses [on a sale] I've ever heard".
R&F's main contractor, Multiplex, downed tools in Nine Elms earlier this year over a payment dispute. Work resumed two weeks later following an agreement between both parties.
The Chinese developer has been one of the worst hit by Xi Jinping's "three red lines" policy, which forced housing developers to reduce debt following a surge in liabilities in the sector.
R&F has struggled to make bond payments in recent months, having extended deadlines for some offshore bonds. Fellow Chinese developer Evergrande has defaulted on bonds, with creditors threatening enforcement action.
The Telegraph reported in November that R&F had struggled to sell flats in Nine Elms, with fewer than one in 15 homes sold in the first year of marketing.
Over half of the initial sales at R&F's joint venture with CC Land were to related parties, according to corporate filings in Hong Kong. R&F has said this was no longer the case following further sales in 2021.
Fewer than 100 properties were sold in the first three years of pre-sale at the CC Land and R&F joint venture, which has been championed by local officials as key to the regeneration of the area.
Boris Johnson approved the regeneration of Nine Elms when he was mayor of London, describing it "the final piece of the jigsaw" for central London.
R&F's chairman, Li Sze Lim, said: “The disposal is beneficial to the group in optimising the allocation of resources, increasing its capital reserve and reducing its gearing ratio, which is conducive to its ability to reduce risks and achieve long-term stable and healthy development."
R&F UK was contacted for comment.
It came as stocks in Hong Kong posted their biggest rally since 2008 after Beijing pledged to prop up the Chinese economy and markets following a two-day rout.
Chinese vice-premier Liu He promised to enact market-friendly policies to boost its economy as widening lockdowns to contain surging Covid cases darken the outlook.
He also soothed investor fears over a regulatory crackdown on tech and signalled an easing of pressure on China’s struggling property sector.
The Hang Seng index in Hong Kong soared 9pc in its best day for 14 years, helping the index bounce back from a six-year low.
Shares in Shanghai rose more than 4pc in the biggest rise in almost two years.