A property fund backed by an investment arm of the Dubai government bought prime west London property from the Queen's portfolio, the monarch's property managers announced on Wednesday.
The Crown Estate, which manages Queen Elizabeth II's real estate, said in a statement on its website that it had sold the Metropole building and 10 Whitehall Place to a consortium led by International Hotel Investments (IHI) for $255 million.
One of IHI's principal shareholders is Istithmar, the investment arm of state-owned tourism company Dubai World.
"IHI's bid stood out from a strong field of competitors with a proposal to refurbish the building rather than rebuild behind the existing facade," Charles Gardner, the head of office portfolio at The Crown Estate, said in the statement.
"We were impressed by IHI's track record and are confident that they will restore the once grand Metropole Hotel to its former glory."
The Metropole was constructed in the 1880s and was once one of the capital's most trendy hotels, but was requisitioned by the government during World War I, and became the home for Ministry of Defence offices following World War II.
It has, however, been vacant since 2004.
According to The Crown Estate, the 400,000 square feet (37,150 square metres) of available space will be refurbished into a 283-room five-star hotel, along with luxury apartments, overlooking the River Thames.
"IHI and its principal shareholders ... were selected as having the vision to meet the challenge of restoring this once grand hotel to its original use, in a manner most sympathetic to this building's architectural features, townscape setting and history of the site," The Crown Estate said.
The Crown Estate says its portfolio has a value exceeding seven billion pounds, and owns several high-profile properties in prime central London locations such as Regent Street and Regent's Park.
Its revenues from its assets are paid to the finance ministry. (AFP)
Dubai fund buys historic London site from Queen