China's R&F Properties buys luxury London development

Esha Vaish

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)