POLICE have declared the site of the worst fire to hit Edinburgh in decades as a crime scene after allegations the blaze may have been started deliberately.
The news comes as it was revealed city leaders today confirmed the majority of the 11 buildings seriously damaged in the blaze are likely to be knocked down.
But demolition work in the city’s historic Old Town has been put on hold for at least 48 hours until police complete their inquiries.
A police source confirmed the move saying: "We are treating the area as a crime scene as a precautionary measure because of suggestions the fire might have been started deliberately.
The source added: "A squad has been set up to look at the causes of the fire and until those suggestions can be confirmed as true or otherwise, police will be treating the site as a crime scene."
It is understood police have received information that an individual may have been involved and are trying to trace him.
A source said: "There have been several calls regarding individuals which have turned out to be hoax calls. However, we are still following up on information received."
A council spokeswoman said: "The site has not yet been handed over to the council yet. There are still three fire brigade appliances on site and this afternoon a fire and police investigation team, including a forensic science team, will be going in there.
"The site will not be handed over to us until that investigation has been completed, which we anticipate happening later today." City leaders also announced they hope that all significant architectural features from many of the burned-out structures - some of which date back to the 1790s - will be preserved and incorporated into any new buildings as part of the re-development on the site.
Council leader Donald Anderson today admitted that demolition work was expected to be "substantial". Following consultations with Historic Scotland and the Edinburgh World Heritage Trust, a digital photo survey will be taken of the buildings affected before they are razed to help reconstruction work.
Officials said that only exterior walls remain standing in some premises - with the "potentially unsafe condition" of many structures prompting the need for a quick start to demolition process.
Speaking before a meeting of the city’s emergency planning team today, Councillor Anderson added: "Because of the sensitivity of the area, extreme care will be taken during the demolition process."
Forensic experts were expected to begin the process of sifting through the rubble today for clues to the cause of the blaze.
After 60 hours of intensive firefighting, investigators began analysing the ruined shell above the popular Cowgate nightclub La Belle Angele, where the devastating blaze is thought to have broken out at around 8pm on Saturday. Lothian and Borders Fire Brigade investigators were expected to move into Hasties Close, at 209 Cowgate.
Meanwhile, the total cost to the city has been estimated at more than 100 million, with job losses likely to be in the hundreds.
Divisional Officer Tom Munro of Lothian and Borders Fire Brigade said investigators will have begun to question witnesses to the fire - the first being the person who made the 999 call.
He said: "One of the first things you want to do is talk to the person who discovered the fire.
"It’s important that the investigator finds out what they saw, for example what colour was the smoke, what did they smell, was there anything distinctive other than the smell of smoke.
"From that you can tell whether the fire could have been started with an accelerant such as petrol or started through paper, wood or even a discarded cigarette."
Mr Munro said people within the building where the fire started would be also be questioned as would staff and the initial crews who were first at the scene.
He added: "Even answers such as a door was open, glass was smashed, where the glass was lying - these things are all indicators into possible causes.
"The investigator will start to build a framework from which he can then start to eliminate ideas and pictures that are building up, such as disgruntled staff, possible grudges against the owners, is the building likely to be a target."
Firefighters yesterday continued to dampen down the shells of the affected buildings in the Cowgate and South Bridge, reducing their cover to four engines and around two dozen firefighters. They were forced into action again at around 2.45pm when a secondary blaze broke out again in the Gilded Balloon building, which was home to around a dozen other small businesses.
Major disruption to traffic and surviving businesses will affect the area for weeks and possibly months. North and South Bridge from Princes Street to West Richmond Street and the Cowgate from the Grassmarket to St Mary’s Street are expected to remain closed to vehicles and pedestrian traffic for several weeks.
However, Chambers Street was today re-opened for buses and taxis.
Cllr Anderson added: "The fire on Saturday has left a gaping wound in the historic heart of the city. Many of these buildings have been reduced to shells. I have no doubt Edinburgh will bounce back and am convinced there will be buildings of appropriate quality put in place, were these buildings to be demolished."
It is understood demolition work is likely to start at the western edge of a string of burnt-out buildings on the Cowgate. Demolition teams will then move eastwards, knocking down buildings deemed unsafe.
Experts have still to decide whether to knock down the seven-storey Leisureland building on South Bridge.
Planning convener Bob Cairns suggested the council would be prepared to consider buildings of a modern design for the devastated site - where only the Gilded Balloon was C-listed by Historic Scotland. Finance experts say insurance companies will refuse to cover clubs within the warren of underground vaults, backrooms and alleys that make the Cowgate a magnet for clubbers.
Without insurance, many clubs will be forced out of business, according to Alan Russell, of city insurance brokers Bruce Stevenson.
Old Town companies not directly affected by the fire could also be hit hard, with insurance premiums likely to go through the roof soar as finance firms
Promoter George Duffin, who is involved with La Belle Angele, said job losses from the fire would run into three figures. "There are 20 staff not getting a job in our business," he said.
Sue Hean, spokeswoman for Festival Inns, confirmed three of its properties - Faith, Biblos and Beat Jazz Basement - had been badly damaged by smoke and water.
Graham Bell, of the Edinburgh and Lothians Chamber of Commerce, said the immediate financial cost to businesses in the area would be "catastrophic", but added there was an opportunity for the Cowgate to rise from the ashes.
Around 100 students who had been evacuated from university flats on College Wynd were also allowed to return home today.
The council also said around 30 other people living in the affected area were still unable to return to their homes and were staying with friends and family or in council accommodation.