Brewery site blow as developer goes bust

THE massive regeneration of the former Fountain Brewery has been dealt a major blow after a key developer went bust.

Buredi Fountainbridge – the council-backed company hoping to build flats and offices on the old Tartan Club site – has gone into administration after RBS withdrew its backing.

The land will now be offered for sale in an effort to recoup some of the bank's losses. Property experts, however, have questioned whether anyone will buy the land in the current economic climate.

Buredi Fountainbridge is a subsidiary of Buredi Limited, a joint venture between council-owned developer EDI and housebuilders the Burrell Company.

The company had planned to build 170 flats and an office complex as part of an 80 million development of the former Fountain Brewery social club next to Cargo and Edinburgh Quay.

No public money has been lost in the project, with the only funding to date, including the purchase of the land from Scottish & Newcastle, design and planning costs, being provided by RBS.

The move comes as developers of the adjacent Springside site have put the second phase of their project on hold until the economy improves.

There are also growing doubts over whether the new Lloyds Banking Group will continue to develop HBOS's plans for a major office hub in the area.

Despite the collapse of Buredi Fountainbridge, the parent company Buredi Limited, whose sites include the Madelvic site on Edinburgh Waterfront, continues to trade as normal.

A spokeswoman for Buredi Fountainbridge 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 their support for the company and therefore for the project."

A spokesman for RBS said: "Lending decisions are made on a case-by-case basis, rather than on the basis of a rigid sector-wide view. We remain willing to support proposals from the property sector if we consider that the deal makes good commercial sense."

A spokeswoman for the administrators KPMG added: "They (the administrators] will begin marketing the property for sale in the near future."

Despite the likelihood that the value of the land will have fallen by up to 50 per cent in the last year, property experts have doubts about whether a buyer will be found.

Stewart Taylor, director of business space at property firm CB Richard Ellis, said: "What has really killed this scheme has been the residential side. Demand has dropped and values have dropped, so it makes it a big risk."

The Lloyds Banking Group said it was not yet in a position to make a final decision on the future of its site.

A group spokesman said: "We have only just begun assessing our options for the site. It will be some time before any decisions are made."

Developers at Springside confirmed that the office element of its project remained on hold, although they said work was progressing on the housing element.