Cala to sell deaf school site after flats project fails

Housebuilder Cala, which struck a deal to buy the site from the board of the former school for deaf children eight years ago, is disposing of the site without undertaking any work.

Cala appeared to have pulled off a remarkable coup by snapping up the A-listed property without it going on the open market. The company won permission to transform the building into 63 luxury flats - with another 72 earmarked for the 18-acre grounds - in the spring of 2005.

But the 80 million plans foundered after the property market in the city slumped dramatically in 2008. Cala had only managed to take possession of the building that year as the firm had to wait until staff and pupils moved out.

It emerged last year that Cala was in talks with another developer over a hotel development on the site after it decided to put work on the project on hold. However Cala pulled the plug on these talks last month and has now decided to market the site in the hope of recouping its cash.

However, despite the strug-gles of the capital's property market in recent years, it has been cash-rich buyers of luxury homes that are thought to have propped up prices.

Peter Allen, head of residential development at Savills, added: "Landmark properties such as 1 Hyde Park in London, are attracting record values in an otherwise turbulent market.

"Equity rich buyers, who are not reliant on bank finance, are looking at the top end of the residential investment sector as a relatively safe alternative to the stock and commodities markets. They perceive that good returns are to be made in the medium to long term, especially if the product is one of a kind.

"The historic and palatial Donaldson's, in the heart of Edinburgh's prime market, certainly fits that profile."

Kevin Whitaker, a director at Cala, told Scotland on Sunday that another developer could start work on site "within months" if they chose to pursue the existing scheme.

He added: "We were really only in discussion with one party over the last few years, although there was an investor, a property developer and a hotel operator involved, who were not able to reach agreement.

"There is no price tag and as such it'll very much be down to what the market decides, however we wouldn't want to do any kind of conditional deal."