£50m hotel plan lifts beleaguered city property sector

Published on Saturday 9 January 2010 15:41

A £50 million ten-storey hotel planned for Leith Shore has been given the go-ahead by City of Edinburgh Council.

The development, which will be the first hotel built in the area since the late Nineties, is being welcomed as a rare boost for the city's commercial property sector, which last week suffered the demise of Kilmartin, one of Scotland's highest profile developers.

Plans for the hotel were submitted by AWG Property, the development division of Anglian Water Group, for a 0.6 hectare site by Ocean Terminal.

Tony Donnelly, managing director of AWG, said the scheme was the latest in a string of AWG developments in Leith Shore. He said: "We have been long-standing supporters of the regeneration of Leith, from being the first developer to complete a residential scheme in Rennies Lock at the dockland area, to the 6,000 square metre office development at Ocean Point 1. This is an encouraging step forward for the ongoing regeneration of the area."

Chris Dougray of DTZ, who is marketing the property, is currently searching for a hotel operator for the site.

The news comes just days after administrators were called into Kilmartin, the second HBOS-backed property firm to collapse in three months. Rumours had been circulating about the firm since last summer but Iain Wotherspoon, chairman of Kilmartin Property Group, was finally forced to admit defeat on Thursday after failing to secure a deal with HBOS owner Lloyds Banking Group, or find new sources of funding.

According to fresh research from Jones Lang LaSalle (JLL), commercial property deals totalled 1.1 billion last year, only marginally more than the 1.04bn recorded in 2008 when the market hit historic lows.

Alasdair Humphery, managing director for Scotland at JLL, said the market was likely to remain slow in the first half of this year although he expects an improvement in the final six months.