Chinese conglomerate Dalian Wanda has pulled out of plans to buy part of the Nine Elms Square site in central London, which comes hot on the heels of the Chinese government's latest rules on investment in overseas deals.
The company said it has transferred its interest in the 470-million-pound ($603 million) development to Hong Kong-listed R&F Properties and CC Land.
Under the new rules issued by the State Council on Friday, investments in property, hotel, film, entertainment and sports are restricted. The policy came as the government increased scrutiny of overseas investment and reined in speculative deals by Chinese companies in some industries and sectors, such as equity investment funds, and the defense sector.
"It is very hard for the company to get government approval and the outward remittance will also be a problem," said an industry analyst who declined to be named.
Wanda had been planning to make the purchase in a joint venture with British companies St Modwen Properties and Vinci.
The 40,500-square-meter Nine Elms Square plot has outline building consent for 1,821 flats across three towers of between 32 and 54 floors.
The consent was previously obtained by St. Modwen and Vinci, which had plans to develop 230,700 square meters of land around the Nine Elms area.
It's the second time in five weeks that Hong Kong-listed R&F, one of China's top developers, has stepped in at the last minute as a buyer in a Wanda-linked deal. Last month, R&F agreed to buy 77 hotels from Wanda for around 19.9 billion yuan ($3 billion) in a surprise twist to a previously announced deal where Sunac China Holdings Ltd was to have been the sole acquirer of $9.3 billion of Wanda assets.
Earlier this year, R&F acquired a mixed-used development at Vauxhall Square, London, for 157.8 million pounds. The site sits adjacent to Nine Elms Square, meaning the developer controls two schemes at the Vauxhall end of the approach to Battersea Power Station.
CC Land is known in the United Kingdom for its 1.15-billion-pound purchase of The Leadenhall Building, commonly known as the Cheesegrater, in May.
Wanda last month agreed to sell most of its domestic theme park and hotel assets for $9.4 billion, while shares of the group's Wanda Film Holding Co unit have been suspended from trading since early July, pending a restructuring of the company.
