The Caltongate development for the Old Town has been approved by eight votes to six.
The news comes after councillors met to decide the future for the troubled project, as a petition signed by 5000 objectors was handed in.
Councillor Ian Perry, Convener of the Planning Committee, said: “First of all, I would like to thank those that have taken the time and effort to contribute to the debate about this site over the last 10 years.
“Following an 18-month consultation period on the current plans, it is great news that we finally have a decision on a development which I believe will breathe new life into a long standing vacant site in the heart of the city.
“The plans we considered today will preserve the listed Canongate Venture building, the historic Sailor’s Ark frontage on the Royal Mile, and give an exciting new life to the arches on East Market Street.
“There will be substantial investment across the site in the public realm and the creation of a new public square will make the area more attractive and pedestrian friendly. A new viewing area will be built for people to enjoy the views to Calton Hill from Johnston Terrace.
“As the development has a mix of uses it will attract many more people to the area and with new housing on adjacent sites, including 40 affordable homes that are already being built, it will bring a real boost to the Old Town community.
“The economic benefit of this new development is huge and is estimated to bring in £43m to the local economy each year, as well as creating almost 2,000 jobs.”
The news has been welcomed by Artisan Real Estate Investors, the international development consortium driving the transformation.
Lukas Nakos, Artisan’s managing director said: “This has been an exceptional planning approval for an exceptional development. Today marks a significant milestone in the evolution of one of the most challenging city centre developments anywhere in the UK, and we now have the opportunity to deliver on our promises made when we first started this process, more than two years ago.
“Our proposals are the result of an 18-month consultation process bringing together local people, businesses, civic partners and heritage bodies. This has led to many facets of the area’s unique Old Town setting being retained to preserve the character of the development, including the retention of the Canongate Venture building and the façade of the Old Sailor’s Ark.”
He added: “Artisan will now bring international capital investment of £150 million to the table, coupled with the vision and commitment needed to complete what has already been started. We now have the opportunity to create, in the very heart of Edinburgh, one of Europe’s most exciting and vibrant mixed-use communities which will set an international benchmark for sensitive and innovative development.”
‘Inappropriate and ugly’
Earlier today best-selling writer Alexander McCall Smith talked of the consequences for the city if the controversial £150 million development went ahead.
He said: “How can we destroy the very thing that brings people from all over the world to Edinburgh? How can we allow inappropriate and ugly developments when there are plenty of constructive ways of regenerating old areas? How can those in charge of these matters ignore the chorus of well argued and concerned criticism of such plans?”
Protesters gathered outside the City Chambers this morning in a last-ditch attempt to halt the scheme.
Mr McCall Smith joined a chorus of opposition from heritage groups and Old Town residents, backed by the petition, in calling for an urgent rethink.
The famed author of the successful No.1 Ladies’ Detective Agency series told of how he loved to “write about the beauty of Edinburgh and its charms as a lived-in city” and the envious letters he would receive from all over the world.
“The Old Town is one of the great glories of Scotland, indeed of Europe,” he said.
The author urged city leaders to “listen to the voices raised against this insensitive plan” on the day the 220,000 sq ft design – boasting a £6.5m civic square off New Street - was approved.
The new office and retail quarter - which will dominate a huge swathe of wasteland near Waverley Station boasting a £6.5m civic square off New Street – was passed by the planning committee after officials recommended approval.
The plans look set to transform a huge gapsite that has lain derelict since the flattened plot – formerly home to a bus depot turned popular nightspot – was finally demolished in 2006.
Its developers, a consortium led by South-African firm Artisan, submitted plans for a new Old Town landmark boasting office space, 400 hotel bedrooms, 28 retail units, 145 residential units and 40 affordable homes.
The site is expected to create 1750 new jobs and 720 construction jobs in its building phase, which could begin this spring.
Artisan Real Estate Investors revived collapsed plans for Caltongate after the original developers Mountgrange Capital plunged into administration in 2009. They succeeded in dampening some opposition by producing pared down proposals, that significantly reduced the scale of the site and saved from demolition historic landmarks including Canongate Venture and the facade of the Old Sailor’s Ark.