Qatari Diar was left pondering its options yesterday about what to do with one of the world's most expensive housing schemes.
The property arm of the Qatari sovereign wealth fund announced it had put its US$3 billion (Dh11.02bn) Chelsea Barracks project in prime central London on hold because of doubts about whether the scheme of 448 luxury flats would financially stack up.
In a press statement issued yesterday, Qatari Diar said it was "currently refining its strategy for the development of this unique site to progress and realise its vision for this important part of London".
It added that it was "taking advantage of the opportunity to review and respond to the context of the prevailing economic environment in preparing for the next stage of the development".
A spokesman added: "The revised timetable for appointing architects, developing the detailed designs for and submitting the planning application for Phase 1 is not yet finalised. We look forward to providing further details in due course."
The 12.8 acre site has remained empty after the British ministry of defence sold it to Qatar in 2007 for £959 million (Dh5.68bn).
The news comes amid fears that the United Kingdom is heading towards a triple dip recession after GDP fell by 0.3 per cent in the three months to the end of December.
It also follows a number of tax measures brought in by the UK government designed to hit overseas investors in prime London property including an annual charge of up to £140,000 and a 28 per cent capital gains tax.
Property experts in London suggest that the scheme, Qatar's largest development in the UK to date, represents too much of a risk given the high price the developer paid for the land back at the height of the boom.
The setback has been the latest in a long and contentious development history for the site, which was built in 1860 as the home of the Queen's Guard. Qatar originally bought the historic site as part of the Project Blue joint venture with the property developer Christian Candy beating a total of 13 rivals who tabled bids totalling £10bn between them.
The offer wiped the floor with the ministry of defence's own valuations for the site, which had stood near the £250m mark just six months earlier.
However, the plans came unstuck in 2009 when Prince Charles, the heir to the British throne, was understood to have criticised Project Blue's Richard Rogers-designed ultra modern plans to build 638 flats at the barracks site.
Qatari Diar later withdrew its development plans and scaled back its proposals causing controversy in the UK as the architect launched a scathing attack on the Prince of Wales, questioning the appropriateness of his intervention in the project.
Christian Candy's CPC Group later launched a legal case against Qatari Diar for breach of contract, but the case was settled in 2010 following an unreserved apology by Mr Candy.
Last year, according to Knight Frank, overseas purchasers bought £2.2 billion of new-build flats in central London, an increase of 22 per cent from £1.8bn in 2011. They comprised a total of 52 nationalities.