Quartermile for sale as owner claims timing ‘ideal’ to offload development

If the sale goes ahead, it will be the second time in a decade that project has changed hands.

The Lloyds Banking Group-controlled developer Gladedale said that it had asked CB Richard Ellis (CBRE) to seek a new owner for the key regeneration project on the former hospital site.

In a statement yesterday, Gladedale said that following a review of “funding options” for the luxury development by a CBRE team it had decided that if additional capital was injected into the £450 million Quartermile project, it could achieve an “end value in excess of £500m”.

It concluded: “As a result, Gladedale has decided to take advantage of Quartermile’s strong track record to secure a new owner with the necessary resources to fully exploit the development’s significant potential.”

The company claimed that the development had “defied the economic downturn by setting a precedent for both residential and commercial values in Scotland” and is “one of the most prestigious mixed-use developments in the UK”.

Neil Fitzsimmons, group CEO of Gladedale Holdings, said: “There are a number of opportunities to accelerate the progress of the development.

“This is an ideal time to take advantage of recent successes and to seek a new owner that can unlock the full potential that this scheme undoubtedly has”.

However, the former Royal Infirmary site, a long-term development project, has been hit by significant delays since the recession and work was said to have ground to a halt in 2009 when the property market crashed.

And even before construction work got under way, the plans saw significant changes. When the development changed hands in 2005, the new owner Gladedale added 350 homes to the scheme, bringing the total 900, but abandoned plans for a five-star hotel.

However, in March Gladedale announced a 107-room “aparthotel” – flats run by a hotel – on the development would be managed by global chain Marriott, while last year the firm sold its Quartermile II office building to a Swiss pension fund for £23m.

Currently the company is said to be developing a block of 31 flats for Hillcrest Housing Association, due for completion in 2012, and the developer said work had started on the next phase of 122 new-build apartments. Retailers such as Sainsbury’s, Peter’s Yard and Starbucks have also opened outlets in the complex.

Jasper Masters, head of commercial real estate advisers CB Richard Ellis, said: “There has already been significant interest underlining its broad appeal and we are anticipating strong competition.”

Edinburgh city council’s convener of economic development, Tom Buchanan said: “I think there’s no doubt that Gladedale are, like other developers, feeling the effects of the changed economic climate.”

He said the council would work with any investor to ensure the project was completed.