The possibility of re-starting car production at the former MG Rover site on the outskirts of Birmingham moved a little closer on Wednesday with the signing of a property lease.

Nanjing Auto, the Chinese company which bought MG Rover last year, has inked a 33-year deal on the Longbridge site with its property developer owner, St Modwen Properties, which bought the facility from the car maker several years ago and leased it back.

"A landmark agreement, which opens the way for future car production at Longbridge, Birmingham, was signed today," St Modwen said in a statement.

It was looking forward to a "long and fruitful" relationship with the Chinese group, the property developer said.

The agreement is for Nanjing to take a 33-year lease at a rent rising from £1.8m per year on 105 acres of the 469-acre site. This comprises the South Works of the former MG Rover plant, which incorporates two car assembly plants, the paint shop and administrative offices, together totalling more than 2m sq.ft.  The lease terms incorporate a six-month break clause in case Nanjing is unable to confirm a viable long term future for the site.

Nanjing Automobile Corporation (UK) chairman Wang Hongbiao said: "I am delighted that we have reached an arrangement with St. Modwen Properties. This means that we can move forward with our business plan to build cars at Longbridge. The MG brand is famous and we are proud to project it into an exciting future.

Nanjing has rights only to the MG badge - though up for sale, Rover is still owned by BMW whose CEO Helmut Panke last year suggested Chinese automakers might find established brands useful for penetrating western markets.

According to the BBC, the property deal was welcomed by the Transport and General Workers Union (T&G), which reckons Nanjing's business plan could lead to the production of 100,000 cars a year and create 1,200 jobs, but local member of parliament Richard Burdon said people needed to understand the scale of the deal.

"We are not talking about Rover's return here, we're not talking about the return of mass car manufacturing," Burdon told the broadcaster. "We're talking about a relatively small, but significant, sports car manufacturer...that could lead to a broader regeneration of the area."

The BBC said St Modwen and local authorities have wider ambitions for the Longbridge site, which would see up to 10,000 jobs created through a mixture of housing, retail and industrial developments.

St Modwen Properties chief executive Bill Oliver described the agreement as opening a new chapter in the long history of car production in Birmingham.

"We always said that if there was a viable plan for a long term automotive use at Longbridge, we would do our best to facilitate it."

Nanjing had earlier denied media reports last week it would shift production to nearby Coventry.