Battle of Caltongate on the cards over new £300m plan

They are claiming a string of “well-known” international hotel operators are interested in the site, next to the city’s Waverley Station, and have declared the finance is in place to get the project underway.

But they have insisted they have no intention of changing the most controversial element of the previous scheme, which would see two listed buildings demolished and nine flats on the Canongate to make way for the hotel.

The Scotsman revealed yesterday how a new investment firm, Artisan, bankrolled by some of South Africa’s leading financial firms, had clinched a deal to bring the project back from the dead – nearly three years after previous developer Mountgrange collapsed.

Lukas Nakos, frontman of the consortium thought to have paid £7 million to take a huge gap site out of administration, said it was “very important” for the hotel to have a Royal Mile address, but insisted it would be “sensitive” to heritage concerns.

The consortium’s stance means it is set on a collision course with organisations like Edinburgh World Heritage, the Cockburn Association and the Architectural Heritage Society of Scotland. World heritage organisation Unesco had also demanded the council change major elements of the scheme, including scaling back the hotel complex, and protecting key views of the city.

However the council is desperate to see work get underway on the site, insisting the project is urgently needed to help address a predicted shortfall in grade-A office accommodation, as well as satisfy demand from international hotel operators.

Mr Nakos told The Scotsman that detailed designs would be brought forward for various parts of the development over the next few months, with a view to getting “cranes on site” within the next year.

He said: “We are very excited to get this opportunity to build in Edinburgh in what will be our first project anywhere in the UK.

“We want to create a world-class development that will completely rejuvenate this part of the Old Town.

“We very much envisage a five-star hotel at the heart of that and it is very important that it has an address on the Royal Mile.”

He added: “We are well aware of Unesco’s concerns and what has been said in the past about this development. However we do intend to work within the existing planning consent and will fully engage with all the heritage organisations when we bring forward the detailed designs for the project.”

Marion Williams, director of the Cockburn Association, said: “It is the heritage organisations that have the best interests of the city at heart, not developers that only appear to be interested in making a fast buck.

“I would have hoped that the council would have insisted on changes being made to the previous scheme bearing in mind the level of concerns over the previous project. They council obviously doesn’t value the views of anyone who objected previously.”

Dave Anderson, director of city development at the council, said: “From an economic development viewpoint, this deal has to hugely welcomed.”