Waterfront on ice threat as project falls six years behind

THE massive regeneration of Granton waterfront is running six years behind schedule and risks being put on ice indefinitely, it emerged today.

Site owners Waterfront Edinburgh Ltd hoped to have the 2900-home project completed by 2017, but the property crisis and credit crunch mean the completion date has been put back to 2023. It comes after the value of land at the waterfront more than halved from 33 million in 2006 to just 14.5m today.

And there were warnings today that if further investment cannot be secured, the development could be mothballed.

That would place a serious question mark over the feasibility of the proposed Roseburn to Granton spur tram line, though tram chiefs today insisted they were committed to the project.

Colin Hunter, chief executive of WEL – a joint venture between Edinburgh City Council and Scottish Enterprise – said the plummeting price of land had left the firm's balance sheet "shot to pieces".

He admitted he was now hunting for long-term investors to get the project back on track, including possibly Arab oil funds.

He said: "When we first started the project, we envisaged a 15 to 18-year timescale for completion. Now, around six years on, we think it could still take another 15 years to complete the project.

"We've been in talks with a range of long-term investors who we hope will provide money that will accelerate the project."

He added: "The identities of these potential investors are commercially sensitive, but I can confirm that sovereign funds and large pension funds are among them.

"The people we have been speaking to are confident that Edinburgh Waterfront is a good investment, and they will be in it for the long haul."

WEL needs the money to turn 120 acres of contaminated Granton shoreline into land fit for housing. Failure to secure investment will cause further delays, which could put it in danger of breaching banking covenants.

In such a situation, the company's creditor, Bank of Scotland, reserves the right to pull its funding and demand repayment.

The "Armageddon" scenario would leave WEL with little more than 14.5m worth of land, and if house prices collapse the land could soon end up being valued at a quarter of the price.

Mr Hunter said: "A 15 to 20 per cent drop in house prices could translate into a 70 per cent fall in the price of land."

However, deputy council leader Steve Cardownie, Forth councillor and chairman of the Waterfront Edinburgh board, said it was an "unlikely scenario" and would not spell the end of the project.

"We would merely sit on the land and wait for the conditions to improve, but there are no alarm bells ringing," he said.

"The bank is happy that we have money coming in. We have the assets, but we just can't realise these assets at the present time."

Labour group housing spokesman Gordon Munro warned investment could be hard to come by.

He said: "I would be surprised if anyone was willing to take this on. Banks aren't lending to banks, so unless you get some kind of major pension fund manager that thinks this is a good investment, there's little chance that there will be any funding coming forward."

SNP group housing spokesman Norrie Work said the failure of the Waterfront project would be "disastrous" for the city.

He added: "The success of the Line 1b tramline is tied up in the success of the development. We also have a severe shortage of affordable housing in the city."

A spokesman for tram firm Tie said it was "common knowledge" that the area requires continued investment, but the proposed line could prove to be an incentive for future developers.