Stanhope has been chosen as the development partner for Kaupthing Singer Friedlander’s former Middlesex hospital site in London’s West End.

The developer and project manager has been chosen as the joint venture partner by the Icelandic bank in a deal which is understood to value the site at around £50m.

The price is more than three times less than the £175m paid by Christian Candy’s CPC Group in 2006.

However it is understood that Kaupthing has decided to stay involved in the scheme by retaining 80% of the development so that it can profit from a later upturn in value.

Stanhope is buying its 20% stake with backing from Mitsui Fudosan. It beat a £60m bid from Ian and Richard Livingstone’s London & Regional, who had also been shortlisted by Kaupthing.

Stanhope and Kaupthing will now draw up new plans for the development, which had previously been branded Noho Square by CPC.

CPC exited the scheme in October last year in an equity and shares swap involving the Candys’ 9900 Wilshire scheme in Los Angeles.