Flagship Edinburgh development that's barely a Quarter finished

IT WAS billed as one of the most exciting city centre projects in Europe.

• What Edinburgh's Quartermile development will look like when it's finished. Picture: Complimentary

Designed by world-renowned architects, on one of Edinburgh's most prized development sites, Quartermile was meant to be one of the most sought-after places to live and work in Scotland's capital.

But a year ahead of its scheduled completion date, the transformation of a huge former hospital site is a stark symbol of how the credit crunch has affected Scotland's capital.

Key parts of the scheme are still to get underway, while only a fraction of the office blocks and new homes promised have come to fruition.

The 450 million project is running five years behind schedule, with huge swathes of the 19-acre site still lying untouched and unlikely to get under way for at least another two years.

The development company behind the scheme insists it would have been "crippled" had it pressed ahead any quicker with the development, where 5,000 people are eventually expected to live and work, but it says it is now well placed to take it forward. Gladedale Capital says Quartermile's troubles are behind it, with buyers snapping up top-priced homes in new apartment blocks and refurbished former medical buildings before they are completed.

Property experts have pointed out that Quartermile has still managed to attract high-profile office tenants in the face of the downturn, while it is believed to be the only major commercial development currently ploughing ahead in the city centre.

But there is also an admission by Gladedale that the development needs to attract a major hotel chain and its first licensed trade operator before it properly comes to life.

Although a host of new signature buildings have gone ahead, many of these are either lying empty or are only partially occupied. Category A and B-listed buildings remain empty and boarded up.

Just 200 of the 900 homes envisaged as part of the development, on the site of the former Edinburgh Royal Infirmary, are occupied - five years after building work got underway.

A string of empty units created to host cafes, bars and restaurants around a new public square are lying empty. A brick has yet to be laid on several large chunks to the west of the site, where modern new apartment blocks, offices and affordable housing are all planned.

Although promotional signs at the development promise it is now due to be finished in 2013, the developers have admitted that major parts of the scheme, such as the transformation of the A-listed former surgical building into flats, offices, and the last of the new apartment blocks, are unlikely to be finished for another two to three years.

Quartermile has been in the planning stages for nine years since NHS Lothian agreed a deal to sell its huge site to relocate to a new home in the Little France area, in the south of the city.

Fosters & Partners, the award-winning architectural practice behind the Reichstag in Berlin, Hong Kong's airport, and the Swiss Re Building in London, was charged with designing the scheme, with demolition getting underway in May 2004.

All had seemed well when Grand Designs presenter Kevin McCloud visited the development almost four years ago to herald the first flats going onto the market, with about 90 of them selling in the first 12 months.

And the first office tenants had already been secured when First Minister Alex Salmond officially opened the development's signature commercial building in November 2007.

Paul Curran, managing director of Gladedale, told The Scotsman that work virtually ground to a halt two years ago when the capital's property market crashed, but insisted the development had since turned the corner.

Some 60 apartments have been pre-sold on top of about 200 that are already occupied, with the three top-priced penthouses built to date already snapped up, for prices topping 1.5m each.

He said: "There is no denying we were badly affected by the credit crunch. The market slowed down completely in 2008 and there was very little work happening on site during that period.

"The debts would have been crippling had we pressed ahead with the development any quicker than we did. However, things have picked up a lot since then. We have been very careful to manage the supply and demand of homes and we think we are now benefiting from this.

"Unlike a lot of developments in the city we are now managing to pre-sell flats before blocks are finished. That is making a huge difference for us.

"We are putting more flats onto the market later this year, and fitting out new blocks next year, and also hope to be on site on other parts of the development next year."

Mr Curran said Gladedale was in advanced negotiations to secure an operator for a proposed "aparthotel", while he said several leading chefs had been viewing sites around the recently completed public square.

He added: "One of the office developments is 75 per cent full while another, which we have already sold on, is around 50 per cent occupied. Tenants like Sainsbury's, Starbucks and Peter's Yard, who have recently taken on a second site, have done very well, and we now have a 24-hour gym on site.

"But it would certainly make a difference if we could attract a major bar-restaurant operator into the square, where we hope to have a number of different outlets that complement each other.

"The hotel is a bit further off but we know there is a lot of interest from operators interested in opening up in the city and it's still a very attractive site."

Simon Rettie, managing director of residential property agency Rettie, said: "What has been built at Quartermile to date has been well very sought-after and it does seem to be performing well at the higher end of the market with the prices they have been achieving.

"It's created a new market away from the traditional buyers who have invested in the New Town. It's quite a healthy location to be living next to such a green lung as the Meadows.

"But I think the fact that so much of the development still has to be completed is a clear sign of the economic circumstances of the last couple of years."

Cameron Stott, a director of property firm Jones Lang LaSalle, added: "Quartermile has actually done well to attract big-name occupiers like Morton Fraser and Maclay, Murray & Spens when the market conditions have been so difficult. It's certainly some way off from being properly established, but you have to bear in mind the economic conditions over the last couple of years."

From six beds in 1729 to 900 modern homes

THE first Edinburgh Infirmary opened in 1729 off the High Street, with a grand total of six beds for the "relief of the sick poor".

The hospital was granted a royal charter in 1736, but the Lauriston Place site was not bought until 1869, when it measured 11 acres and cost just 62,438. The hospital moved there in 1879.

Buildings on the site date back to 1750, but the main hospital was created by the Victorians.

In 1948, the infirmary became part of the NHS and from 1974 it was a directly managed unit of Lothian Health Board.

A deal to build a brand new hospital at Little France was sealed by NHS Lothian in 1998 and the site was put up for sale two years later.

A 33 million sell-off deal to developer Southside Capital was agreed in June 2001 and within two years all services at the hospital had moved out.

The first plans for the Quartermile development emerged in 2002, but the scheme soon ran into protests amid fears that the new apartment blocks planned would ruin views of the city centre from the Meadows and Bruntsfield Links.

Several listed buildings were demolished in the face of protests from heritage groups although the developers agreed to keep some 18th and 19th century buildings, including the A-listed former surgical hospital, on Lauriston Place.

The development changed hands in January 2005, before construction work got under way. The new owner Gladedale added 350 homes to the proposed scheme, making 900 in total, but ditched plans for a five-star hotel.

The first home-owners moved in late in 2007, and soon after came the maiden commercial tenant, Scotland's first Swedish bakery, Peter's Yard.