CI-One Construction, Interserve's joint venture with China State Construction Engineering Corporation (CSCEC), said it has "mutually agreed to end negotations" with Dalian Wanda over its appointment as the main contractor at One Nine Elms, near Vauxhall.
The two companies were awarded the £550m contract last summer, beating rival shortlisted bidders including Mace and a separate CSCEC joint venture with Atkins to win the job. It is unclear why talks broke down.
A spokesperson for CI-One said: "CI-One Construction and Wanda One have continued to work in a positive manner to conclude outstanding matters to reach contract award on this scheme."
"Unfortunately we have failed to reach agreement and the client has chosen to pursue a re-tender. CI-One has confirmed that we will not participate in the re-tender process. We wish Wanda One well with the project and will continue to support them whilst outstanding matters are concluded.”
Dalian Wanda, which is led by the country’s wealthiest man Wang Jianlin, bought the Market Towers site at Vauxhall in 2013 from Irish developer Green Property, marking its first property deal outside of China.
The previous two 1970s towers on the site will be replaced with two new skyscrapers reaching 42 and 58 storeys, comprising of 437 flats and a five-star Wanda Vistal hotel, which will be the first outside of China.
The first flats inside the taller, 203-metre City Tower went on sale in 2014, with prices starting at £795,000.
The 1.14m sq ft scheme is due to complete in late 2018, although putting the scheme out to tender again could delay the completion date. Work is already underway, with contractors McGhee and BBGE currently working on the ground works.
Wanda One, the UK arm of Dalian Wanda, said it expects to appoint a main contractor in the third quarter of 2016.