The £1bn deal to redevelop Chelsea barracks will be underwritten by a groundbreaking Islamic financing arrangement.
A consortium led by the oil-rich Qatari investment fund and the property entrepreneur Christian Candy, which purchased the 5.2 hectare (12.8 acre) site at the end of January, said the deal would be the largest Islamic financing on a property in the UK.
Islamic law prohibits charging or paying interest, so bankers and lawyers have developed a rapidly growing financial market by restructuring conventional products to make them compliant with religious requirements.
The syndicated financing is fully underwritten by a mix of western and Middle Eastern banks, according to a press release issued by the developers.
"The financial structure developed here has allowed us to deliver a truly innovative financing solution for the global real estate sector," said Patrick Chenel, chief financial officer for Qatari Diar, the property arm of the Qatar Investment Authority. "We have broken new ground with our advisers by creating and setting up Islamic financing of a scale not seen before in a major real estate acquisition in [the]UK."
Candy, 34, who together with his brother Nick has created a multimillion-pound property empire in a series of high-profile deals, said: "This is the most important redevelopment scheme in London in the last 50 years."
Proposals for the scheme, which will be subject to final planning approval by Westminster city council, will transform the concrete parade ground and army buildings into a mix of luxury apartments and more affordable units designed by Lord Rogers and developed by the brothers' Candy & Candy vehicle.
The red brick-fronted barracks built in the 1960s will be demolished. The troops who once stayed there have already been relocated to Woolwich in south-east London.
The prime site in Chelsea, an area popular with London's rich and famous, fetched more than three times the £300m expected by the Ministry of Defence when it was put up for sale three years ago.
At some £75m an acre, the transaction is the biggest residential property deal ever struck in the UK. It dwarfs the Candy brothers' previous record, the £150m purchase of One Hyde Park in Knightsbridge, opposite Harrods, in 2004.
The brothers have 5m sq ft under development management across the world, including sites in Beverly Hills and 20 acres in central London. Aswell as One Hyde Park, the London projects include Noho Square (formerly Middlesex hospital), 21 Chesham Place and One Kensington Park.
Source: Guardian (English)