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Nine Elms developers borrow £400m amid Chinese property crisis

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nine elms development
nine elms development

The Hong Kong developers behind the Nine Elms regeneration in south London have borrowed £430m from banks amid fears that the escalating property crisis in China could hit projects in the UK.

The loan will enable R&F Properties and CC Land to cover the remaining costs related to the first phase of the Nine Elms development which will involve the construction of 600 new apartments.

A consortium of lenders led by Chinese state-owned bank Citic group and Lloyds Bank provided the development loan, with support from the Bank of East Asia and OakNorth, industry website ReactNews reported.

It comes as the Chinese property behemoth Evergrande teeters on the brink of collapse, raising fears that the fallout could spread to overseas developments. The company's electric vehicle division suspended plans for a secondary listing on Monday after missing a bond payment deadline.

Meanwhile, R&F has faced criticism over delays to the project, with questions over its commitment to completing the scheme. Much of the regeneration is dependent on R&F, which is facing increasing pressure over its debt level from the Chinese government, from whom some of the loans stem.

CC Land and R&F will not inject any equity into the first phase of the project as part of the latest financing.

Dickie Wong, deputy chairman and executive director of CC Land, said the funding would enable it to plan for the second and final phase of the project. The first phase of Nine Elms Square is scheduled for completion by early 2023, with the whole scheme to be completed by 2025.

Mr Wong said: “The funding from the syndicate banks is the kind of strong endorsement for this project we have been hoping for.

“I believe Nine Elms is the most attractive part of London in terms of regeneration and we are very confident about the
long-term future of the London market."

Following completion, Nine Elms will comprise 12 buildings with 1,400 homes, shops, restaurants and 120,000 sq ft of offices. The development will house facilities including a 30 metre indoor heated pool, gym, spa room and cinema.

Despite financial uncertainty in China, Mr Wong said CC Land was evaluating the next place for developments in the UK, with no intention to repatriate profits from the money invested in London.

A spokesman for R&F said it was "fully committed" to London and had a major programme of developments progressing at pace at Nine Elms.

The fresh funding follows recent struggles to market the properties. One agent previously told The Telegraph that the project was "a hell of a leap of faith" and that the level of interest in the area should worry the developers.

The financial support for the Nine Elms project comes as more Chinese developers are plunged into financial uncertainty.

Shares and dollar bonds in Sunac China Holdings, another major Chinese developer, declined further on Monday, as investor fears were stoked following a request for government support to ease pressure on sales.

Shares of the Hong Kong-listed firm finished Monday’s trading 9.4pc down at its lowest close since June 2017, adding to
Friday’s 6.9pc loss. Its 6.5pc bond due 2026 dropped 5 cents on the dollar to 81.3 cents.

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