Dalian Wanda has pulled out of a deal to buy the £470m Nine Elms Square development site in the wake of intense scrutiny from the Chinese government of its overseas investment activity.

Wanda had exchanged contracts with St Modwen Properties and Vinci for the 10.2-acre site in June, but a day after the completion of the sale, it revealed it had “transferred its ownership of the Nine Elms Square project to a third party”.

It later emerged that the new owner was a joint venture between Chinese developer R&F Properties and Hong Kong-listed CC Land.

The news comes a month after Wanda, which still owns the £700m One Nine Elms development, sold most of its hotels and theme parks to Sunac China Holdings and R&F for about $9.5bn (£7.4bn).

It also follows reports last month that the Chinese government had ordered the country’s banks to cut off funding for some of Wanda’s overseas projects believed to have breached the government’s restrictions on overseas investments.

New guidelines

At the end of last week, China outlined new guidelines on foreign investment, which put real estate on a restriction list along with other items including hotels and sports clubs.

Overseas investors have been particularly active in London in recent months, and those from the Far East have been involved in some of the largest land deals. Recent CBRE research found that overseas companies represented 83% of development land buyers in Q2 2017.

One of these deals was R&F’s acquisition of Vauxhall Square, a planned 1.5m sq ft mixed-use scheme in Nine Elms, for £157.77m in April.

Weeks earlier, it had acquired Croydon’s Nestlé Tower for just under £60m. Far Eastern conglomerate CC Land is best known as the owner of the Leadenhall Building - or Cheesegrater - which it acquired in May for £1.15bn.