Demand for quality housing may see barracks site sales raise £50m for MoD
Leading property industry analysts believe the barracks at Dreghorn and Redford, in particular, will be two of the most attractive sites to become available in more than a decade.
They are expected to be targeted by residential property developers when they go on the market over the next four years.
A 51-acre site in the nearby Craighouse area was sold by Edinburgh Napier University for about 10m several months ago, despite the slump in the capital's property market.
Major developments across the city have ground to a halt in recent years, with the property firm which snapped up Donaldson's School for the Deaf shelving plans to convert it into residential homes and putting the entire site up for sale in April.
Other major developments to be stalled include the promised overhaul of the St James Centre in the city centre and the controversial Caltongate development, in the Old Town.
However, it emerged in May that sales of 1m homes in Scotland soared last year as the market bounced back from the slump - with Edinburgh accounting for almost half of the sales, some 70 homes.
One property put up for sale earlier this year in the Morningside area was on the market for 2.25m.
Some experts believe the army's portfolio will be as sought after as the former Edinburgh Royal Infirmary, which was sold ten years ago by NHS Lothian for around 33m.
Edinburgh Napier University sparked a major bidding war last September when it announced it was quitting its historic Craighouse campus in favour of a new one at Sighthill.
But the MoD plan is likely to come in for severe scrutiny from community groups in the Colinton area who fear the closure of the Dreghorn and Redford bases will dramatically change their community and lead to a huge inlux of extra traffic.
And it is less certain what will become of the army's historic Scottish headquarters at Craigiehall, near Cramond. A former hotel and country club, it was requisitioned - like many large country houses - by the army at the outbreak of the Second World War. It is thought some form of hotel development is most likely, with a number of luxury operators believed to be touting for sites around the capital."
Charles Guest, a partner at property firm Ryden, said: "There is no doubt both Dreghorn and Redford are extremely valuable assets for the MoD. I'd liken them very much to the old ERI site and I think there will be a lot of interest in them.
"I've seen estimates that the portfolio is worth around 20m at the moment, but I wouldn't be surprised if the three sites go on to generate around 50m."
Stuart Taylor, a director at planning agency CBRE in Edinburgh, added: "The crucial thing about Dreghorn and Redford is they should lead to the creation of more family housing, for which there is still huge demand in Edinburgh.
"I don't see them having any trouble selling them on, although Craigiehall may be a bit more tricky because of the nature of the main building and the large estate that comes with it."
Edinburgh city council last night made clear it had not been involved in any talks about the planned sell-off of the three sites - or the proposed new "super-barracks" on the outskirts of the city at Kirknewton airfield.
Deputy leader Steve Cardownie said: "Although the full impact of this decision won't be known until we have had time for careful assessment, it is bound to have far-reaching consequences for Edinburgh. We will be convening a meeting of all parties to make sure the situation is managed as best we can."
A spokesman for the council's planning department added: "We would expect to have discussions with the MoD at an early stage."
Edinburgh Pentlands SNP MSP Gordon MacDonald said: "The MoD's decision will put a significant hole in parts of this constituency and I will be in touch with the MoD to see what support they will be providing.
"If Edinburgh's barracks are to be sold off, it strikes me that Edinburgh should receive some of the financial benefit the MoD is planning on banking."