Work halts at £13m development after owner HHD collapses

A block of former Standard Life offices on Dundas Street was due to be turned into 24 flats at a cost of about 13 million.

But The Scotsman has learned that Henderson House Developments (HHD), the company behind the scheme, entered administration in late November.

John Reid, a partner at Deloitte and joint administrator of HHD, said discussions were continuing with those funding the project, including Clydesdale Bank, over the future of the development.

It is understood that Rok, the main contractor, is keeping equipment – including scaffolding and a crane – on the site at the administrators' request while talks continue.

Standard Life withdrew almost 300 staff from the 31,000sq ft offices in 2004 following a strategic review by the insurance and pensions giant, which also involved the closure of its premises on Edinburgh's Canning Street and in Leith.

Aberdeen-based HHD bought the Dundas Street offices for 4.15m and unveiled plans to bulldoze the site but retain a car park for residents.

Planning permission for 24 one- and three-bedroom flats and two shops was granted in June 2006, after a previous design for 67 flats was withdrawn by the developer.

Reid told The Scotsman: "At the moment, we're still really considering our options.

"The plans are simply to sell the development 'as is' or to continue kitting it out.

"No final decision has been made – we are considering the options along with the funders of the project, Clydesdale Bank.

"We're in active discussions with Rok, the principal contractor, about what we are going to do with the site."

Commenting on why HHD had entered administration, Reid added: "With the problems in the marketplace in terms of property prices plummeting as they have, the project costings had to be revalued and looked at again.

"It was a question, at that stage, of the company not having enough funding to meet all of its commitments."

Henderson House Developments joins a growing list of property firms that have floundered during the recession.

In October, Gregor Shore – the company behind the Granton Anchor and Platinum Point developments in Edinburgh – was forced into administration by the "material slowdown of the property market".

Reid, and his colleague Patrick Lannagan from Deloitte, were appointed as the joint administrators of Gregor Shore in the autumn.

Figures shown to The Scotsman this month laid bare the true extent of the recession's effect on the Scottish construction industry.

More than 2.5 billion worth of construction projects are on hold, according to statistics from Glenigan, a contracts database that tracks all UK commercial construction tenders.

The bulk of the projects on hold are for housing, office and retail developments worth between 250,000 and 100m.

However, about half of the 2.58bn is accounted for by six large projects, including the Falkirk Gateway scheme, the regeneration of the former Polkemmet Colliery and an extension of Buchanan Galleries.