April 5 (Reuters) - China’s R&F Properties has agreed to buy the Vauxhall Square development in central London from CLS Holdings for a gross 157.77 million pounds ($197 million), a boost to the capital’s faltering luxury residential property market.
The scheme, including two 50 storey residential towers, is one of a number of developments in London designed to cash in on demand for high-end properties from foreign buyers ranging from Russian oligarchs and Middle Eastern oil barons to newly-minted Chinese entrepreneurs.
However, prospects for the market have dimmed over the last year, with prices for luxury flats falling sharply due to uncertainty over Britain’s vote to leave the European Union and changes in sales tax.
Developers, grappling with oversupply, have had to sell entire apartment blocks for discounted prices and change building plans.
Last month, St Modwen said a potential buyer of its up-for-sale 10 acre Nine Elms Square residential scheme had allowed its period of exclusivity to expire. It had already written down the value of the site last year.
Nonetheless, a sharp fall in the value of the pound since the Brexit vote has raised hopes that foreign buyers will return in force.
CLS said it would make a profit on the sale of around 40 million pounds after costs. Its shares were up 6.2 percent at 1,859 pence at 1415 GMT, the second biggest rise on Britain’s midcap share index.
“The deal highlights the depth of international capital tracking UK real estate, removes a perceived higher risk asset from CLS’ portfolio and provides significant capital to reinvest in core high yielding offices,” Liberum analysts said.
R&F will assume some obligations and pay net cash of 144.1 million pounds, CLS said.
$1 = 0.8008 pounds Reporting by Esha Vaish in Bengaluru; Editing by Mark Potter