A CANADIAN investor is lining up a deal to revive the original multi-million pound plan to develop the Caltongate site, it emerged today.
• An artist's impression of the original Caltongate plans, which was to become a commercial hub with homes, a hotel, shops and offices
The Evening News can reveal that a property development firm is on the brink of a deal to buy up the whole site and develop it in line with the original planning consent, which would see the creation of a major new commercial hub featuring homes, a hotel, shops and offices.
The massive site has been lying empty since the collapse of previous developer Mountgrange in early 2009.
It is understood that the city council - which withdrew its own land and property because of frustration at the amount of time it was taking Mountgrange administrator Deloitte to sell the site - could strike a new deal with the developer.
One source close to the development said: "It is the most promising situation we have seen for some time in terms of something happening.
"The prospective investor will look to take forward the consent that is in place; they have an appetite for that."
Previous interest in the site is said to have come to nothing because of the amount that Deloitte is asking for the site.
Mountgrange's main creditor, Bank of Scotland, is owed 74 million, so is thought to be reluctant to accept a deal at the bottom of the property market.
Graham Birse, managing director of Edinburgh Chamber of Commerce, said: "The original consent would be excellent for Edinburgh. There may be some discussion to be had around the edges within that existing consent, such as the mix of hotel, retail and residential accommodation because of the economy, but there is no reason to go back to the start."
• Are you happy to see the Caltongate scheme back on the agenda? Vote here
The city council had agreed to sell the East Market Street arches, which date back to the mid-19th century, to developer Mountgrange for more than 5m. They were then to be turned into boutique shops.
The deal, along with the sale of the Cranston Street garage and Canongate Venture building, was never completed and the council withdrew its assets from the site last year and was considering developing them separately.
But council chiefs are now considering whether they can sell the assets back to a new developer.
A spokesman for the city council said: "If a deal happens, we would clearly wish to be supportive, but we have to take due account of EU procurement legislation when we look at how we dispose of our assets."
Cameron Stott, a director of property firm Jones Lang LaSalle, said: "I do think the original consent could still work. You have got to take a medium-term view with any development proposals."We still think 2011 will be a tough year, but in 2012 and 2013 we expect the market to come back so now would be a good opportunity to develop the site."
John Reid, partner of reorganisation services at Deloitte in Scotland, said: "Negotiations are progressing. At this stage, we won't comment any further."
BACK ON THE DRAWING BOARD
What the original 300 million plan included:
• Hundreds of private homes and dozens of affordable housing units.
• Four office blocks.
• Demolition of Old Sailor's Ark, with retained facade, to be replaced by a new five-star hotel with 211 rooms, a pool and a gym.
• Demolition of Canongate Venture, to be replaced by a conference facility with main entrance and shops on East Market Street.
• A new public square.
• Shops and cafes, as well as restaurants and other leisure uses in a flagship four-storey building.
• New residential street linked to Calton Road.
• Improvements to Jacob's Ladder and Calton Hill Stairs.