Developers blame RBS as £80m plan for brewery site is scrapped

Buredi Fountainbridge and Buredi Developments had been planning to turn the site of the brewery's old social club into a housing and office complex with more than 170 flats.

But the company has been forced to apply for voluntary administration after it said RBS, which had been lined up to bankroll the project, withdrew its support.

The project is the latest of several to be postponed or mothballed in the Fountainbridge area, which was highly sought after for its size and location before the credit crunch brought the commercial property sector to its knees.

Prior to its takeover by Lloyds TSB, HBOS had also planned to build a global headquarters on another patch of the vast former S&N brewery site after it acquired the land in a deal thought to be worth more than 100m.

The directors of Buredi Fountainbridge and Buredi Developments said in a statement that they had no choice but to cancel the project after RBS backed out.

"Despite months of negotiation, the directors of Buredi Fountainbridge Ltd have been unable to secure the ongoing support of The Royal Bank of Scotland (the bankers for this project] and so they have had no alternative choice but to place the company into administration," they said.

"The directors bitterly regret that after years of working to realise this strategically important development, the current difficulties in the financial markets and the wider economy have resulted in The Royal Bank of Scotland withdrawing its support for the company and therefore for the project."

Buredi Fountainbridge and Buredi Developments was a subsidiary company of Buredi Limited, a joint venture between the Burrell Company and the EDI Group, Edinburgh City Council's property business.

No jobs will be affected by the administration as the subsidiary was run by the directors of Buredi Limited, which remains in operation.

A spokesman for RBS said due to reasons of customer confidentiality, it was unable to comment on the Buredi Fountainbridge development.

The news will come as another significant blow for the commercial property sector, which witnessed falls of 40% in 2008, compared with a 30% decline in the equities market.

Property consultants are hoping that the market will bottom out in the second half of this year.

Chris Dougray, a director at DTZ in Scotland, said with savings rates at an all-time low, cash-rich investors stand to make higher returns on properties currently going for bargain prices. "For those investors interested in returns over the medium term, say three to five years, this could reasonably be perceived as a great time to buy," he said.

A few signs of life returned to the Edinburgh market last week when it was revealed that an unidentified private investor has agreed to buy the Gemini building on St Andrew Square, currently occupied by RBS, for 16m. Thistle Property has also bid 9m for George House in the New Town, which houses the Ivory Lounge bar and restaurant.