Haymarket scheme secures £100m bank funding deal

one of the most ambitious development schemes in Scotland is close to announcing a £100 million funding package.

Funding raises hopes that the site of the former goods yard at Haymarket, derelict for 50 years, will soon be redeveloped

Investment bank Evans Randall is believed to have agreed the package to support the first phase of the commercial and leisure project at Haymarket in Edinburgh, the largest development of its kind in the city for a decade.

The completed scheme, devised by Interserve and Tiger Developments, will provide 404,000sq ft of office space, a 165-bed hotel and 60,000sq ft of commercial and leisure space.

Edinburgh Haymarket Developments, the joint venture vehicle set up by the two firms, is also said to be in talks with an operator about a potential second, 180-bed hotel.

It is hoped that the financial package will bring an end to a series of delays at the former railway goods yard site close to the redeveloped Haymarket station. It has lain derelict for almost 50 years during which time it has been used as a car park.

According to industry journal Property Week, Evans Randall will fund the first phase of construction, which includes 91,000sq ft of speculative office building as well as the two hotels. One is to be operated by serviced apartment company Staycity.

The development, at the corner of Morrison Street, has already attracted some seed funding, including £9.6m from the Spruce (Scottish Partnership for Regeneration in Urban Centres) Fund, which has been established with the Scottish Government and European Regional Development Fund.

The Spruce investment is enabling work to go ahead on site preparation and the strengthening of two railway tunnels, as well as archaeological excavations at the site which are now under way.

Agreements have already been reached with food outlets such as Prezzo and Pret A Manger and Tesco. The first phase should be complete by the end of 2016 or early 2017.

It is understood that Edinburgh Haymarket Developments will seek further funding for subsequent office buildings of 150,000sq ft and 90,000sq ft at a later date.

Interserve bought Haymarket from Michael O’Flynn’s Tiger Developments for about £9m, with Tiger kept on as development manager for the four-acre site. Tiger bought the site in 2006 for £41m using debt from Irish Nationwide, and the debt was later bought by Ireland’s National Asset Management Agency.

The site is among a number of vacant plots close to the city centre which are now being developed. Among them is Caltongate, off Canongate, and the former brewery land at Fountainbridge.

Haymarket first gained planning permission in 2004 and work began on site last November.

The funding comes just weeks before the Edinburgh trams systgem begins operating scheduled services, passing close to the site and calling at Haymarket.

Property developers and city council officials will see it as further evidence that the tram system is helping to leverage investment in the city.

The tram was cited in the announcement that the St James shopping centre is to be redeveloped and that the backer may help fund an extension of the service to Leith.