CONTROVERSIAL plans for a £300 million development including hundreds of homes, offices, a five-star hotel and conference centre, and a series of shops and cafes in the heart of the Old Town, are to be revived.
South African developers are understood to have reached a deal with administrators to buy the majority of the site at the centre of the Caltongate scheme, which fell through two years ago, for around £7m. Now they will negotiate with the city council to buy other parcels of land and property, including empty flats in the Royal Mile, to allow the full plan to go ahead.
The deal means Lloyds Banking Group, the main creditor from the collapse of London-based Mountgrange, the developer behind the Caltongate proposals, will be able to recoup only a fraction of the £70m it is still owed.
The consortium, known as Artisan, involves South African financial investment giant Sanlam, its Isle of Man-based offshoots, Mas and Exclusive Holdings, and Ron Persaud, the businessman who first launched his vision to revive the New Street gap site more than a decade ago.
Planning permission still exists for the scheme, which provoked fierce opposition when it was first proposed.
The proposals involved the demolition of two listed buildings to make way for the hotel complex.
Conservation bodies warned about the effect the development would have on key views of the city.
The Caltongate scheme was given final approval by the Scottish Government in June 2008. Some preparation work was done, notably clearing the site at New Street, but Mountgrange collapsed in 2009 and the plans fell through.
The new deal is expected to be formally announced in the next few days.
The city council’s economic development leader, Tom Buchanan, said he was keen to see something happen on the empty site.
He said: “We don’t want to go back to the 1970s and 1980s when we had gap sites that seemed to last for years.”
He said the council could try to encourage the creation of a “government quarter” next to its own Waverley Court base by persuading government agencies to move into offices in the new development.
He said: “With St Andrew’s House up on the hill and the Scottish Parliament just down the road at Holyrood, it would a good place for various agencies to be sited. We have a financial district, why not have a government district?”