A Chinese tycoon has signed a deal to lease land in a remote corner of northeast Iceland, state radio reported on Wednesday, six months after his attempt to buy the property outright was rejected by the government.

RUV said Huang Nubo had agreed with municipalities in the area to lease 70 percent of a 300-square-kilometre farm for 40 years, quoting a deal reached between the parties.

Huang had originally agreed to pay about 1 billion Icelandic krona ($8 million) for the land, with plans to build a golf course, hotel and outdoor recreation area. The government rejected that plan last November, saying it did not meet legal requirements on foreign ownership.

The new agreement is to be presented to the government on Friday, RUV reported. The government is expected to retain its 20 percent share of the farm while some farmers in the area had not agreed to lease the property, the report said.

Iceland's interior ministry was not immediately available for comment.

RUV estimates that an overall investment of about 20 billion Iceland krona?will be made in the project and that 400-600 jobs could be created.

Iceland is recovering from its worst-ever financial crisis after the complete collapse of its top banks in 2008, and it is keen to lure foreign investment to boost economic output.

Huang, who is chairman of Beijing-based Zhongkun Investment Group and was 161st on the Forbes list of the richest Chinese in 2010, has said he plans on building up tourism infrastructure in a sparsely populated part of Iceland.

But some commentators have said the plan raises questions about regional security because of Iceland's strategic location in the Arctic where a number of nations are competing for resources, suggesting that Huang could be a surrogate for Chinese expansionism.

Chinese premier Wen Jiabao was in Iceland recently, marking the first visit there by a Chinese head of state. His visit resulted in agreements between Iceland and China to cooperate in the Arctic region, in marine and polar science and in geothermal energy.