(Bloomberg News) Huang Nubo, the Chinese billionaire whose bid to buy Icelandic land was blocked by the local government last year, said he's secured a deal to lease the property instead, helping him revive his resort project.

A formal investment agreement would be signed "no later than October," Huang, founder of Beijing Zhongkun Investment Group Co., said in an interview yesterday in Beijing. The leasing price would be about $1 million lower than the purchase price and be "a bit less" than $7.8 million, Huang said, without elaborating.

The government in Reykjavik in November rejected Beijing Zhongkun Investment's bid to buy 300 square kilometers (116 square miles) of land, saying it would be "incompatible" with the law amid opposition to foreign ownership of property. Huang plans to develop a resort and a mountain park in Iceland before investing in neighboring countries including Denmark and Sweden to build a "Nordic holiday resort platform," he said.

"The lease agreement is also acceptable and the final outcome is not bad," Huang, chairman of Beijing Zhongkun, said in an interview in his office in Beijing. "Our total investment will probably be less than $200 million, but it's not a small deal there."

Beijing Zhongkun plans to build a hotel, about 100 villas and a golf course on the 10 square kilometers of "buildable" section that he expects to lease for 40 years with a right to extend the contract by another 40 years, Huang said.

The remaining about 300 square kilometers of land will be developed into a mountain park that provides services like hiking, horseback riding and hang gliding to tourists around the globe, he said.

100 Villas

Sale of the 100 villas, mostly to wealthy Chinese buyers, alone may cover the cost for the project, Huang said, without giving an estimate on the price. He would also set up local businesses to manage related tourism, hotel and real estate operations, in addition to a trading company to import Icelandic seafood for Chinese citizens concerned with safety of local food.

Beijing Zhongkun, set up in 1995, had developed 1.2 million square meters of commercial properties by the end of 2008 that include a 3.5 billion yuan ($549 million) shopping center in Beijing, according to the company's website. Huang said he "hopes" to keep cash available between 5 billion yuan and 6 billion yuan for investments.

Property prices in China, which will remain Zhongkun's primary market for the next decade, will rise again as its growing population drives up demand and land prices, Huang said, adding that the government's home-purchase restrictions will hardly work in reining in prices without adopting "market mechanisms."

Property Prices

"The upward trend in urban home prices is unchangeable," he said. "We hope the prices would rise stably instead of surging like crazy in the past couple of years."

China's new home prices rose for the first time in 10 months in June, SouFun Holdings Ltd., the nation's biggest real estate website owner, said earlier this month, after some local authorities relaxed property curbs as land-sale revenue dropped. Home prices have fallen 2.2 percent from the peak in August, according to SouFun, after developers cut prices to bolster sales.

While developers are still under pressure to lower prices, room for profits after discounts still remains, Huang said, adding that the companies, having survived a few rounds of government curbs, are now able to "live through the winter."

"The low tide is over," he said. "Large scale bankruptcies among developers, which we feared before, won't happen."