Edinburgh Old Town project hit by delay

Work on Edinburgh's £300m Caltongate redevelopment is unlikely to begin until next year.

The impact of the credit crunch and ratification of the Section 75 planning agreement is believed to have thrown timescales for the project out by several months.

Sources on the project to redevelop the capital's Old Town dismissed claims made by developer Mountgrange that work would start in a few months.

The source said: "I doubt very much whether it will be as soon as that," naming 2009 as a more likely start date.

An insider at Mountgrange said organising finance for the project would be more difficult than in 2007, but that the main stumbling block would be the Section 75 agreement.

The insider said: "My guess is that a start on site will be made during late autumn this year or early spring next year at the latest."

Local press reported that work was due to start in a few months time after it received approval from the Scottish government last week.

The project includes a luxury hotel, office complex and 200 homes in the Royal Mile.

Sir Robert McAlpine is tipped as preferred bidder.

A Mountgrange spokesman said the firm was committed to commencing work onsite by the end of the year and expected to announce concrete timescales and a contractor in August.

The spokesman said the company was awaiting completion of the Section 75 agreement.

He said: "We hope to be on site before the end of the year, with build time of between three and five years."