The Candy brothers have agreed to sell their stake in the £3 billion Chelsea Barracks scheme and the neighbouring Grosvenor Waterside development to their Qatari partners.

Only days after denying that they were negotiating a buyout, property tycoons Nick and Christian Candy have conceded that Qatari Diar, the development arm of the Gulf state's royal family, has acquired an option to take full financial control of both schemes from Christian Candy's Guernsey-based CPC Group.

Candy & Candy will continue to work on both schemes and will remain responsible for management aspects of the development, as well as marketing and interior design.

But the Qataris will own both schemes outright and be responsible for all future investment decisions.

No details of the transactions were disclosed.

Ghanim bin Saad al-Saad, chief executive of Qatari Diar, said: "The equity transactions are expressions of our deep commitment to the UK real estate market."

Christian Candy commented: "We firmly believe that this is in CPC's best interests.

"We look forward to working ever closer with Qatari Diar on the redevelopment of Chelsea Barracks."

On Friday the Evening Standard revealed that the Chelsea Barracks scheme had been redesigned, taking on board the demands of Westminster Council and the wishes of local residents.

The housing has been substantially scaled back in terms of height and bulk, and a new 1.3-acre park created at one end of the site.

The announcement follows another setback suffered by the Candys last month.

They were forced to pull out of the flagship redevelopment of the Middlesex Hospital, north of Oxford Street, known as NoHo square, after the collapse of their partner, the Icelandic bank Kaupthing.

Nick Candy said yesterday that he was in talks with private equity houses to take a stake in the brothers' interior design business.

They are keen to diversify away from property and plan to launch a boutique hotel chain and ranges of branded fashion and homewares.

The Grosvenor Waterside project, which lies between Chelsea Barracks and the Thames, was bought from a subsidiary of the Berkeley Group in October last year.

The price has never been disclosed, but is thought to have been in the region of £500 million, making it the second most expensive sold in London after the £1 billion barracks site.

The development of Grosvenor Waterside began in 2003 and the first phase was completed early last year.

Phase two, which is expected to be completed by 2012, consists of three buildings containing 355 luxury flats.

Qatari Diar opens its London headquarters in Grosvenor Street today. Its property team is led by John Wallace, formerly of Royal Bank of Scotland.