Developers announce partial flip to purpose-built student accommodation
Work on the 5.9-acre site of the former Royal Bank of Scotland HQ between Dundas St and King George V Park, due to start in July, has been delayed again. Major changes to the plans originally consented in Sept 2021 (20/03034/FUL) are on the way (see Masterplan image below).
New Town Quarter developers Ediston and Orion Capital Managers now propose:
Purpose-built student accommodation (PBSA) instead of the consented build-to-rent uses (BTR1 and BTR2), to be run by a named student operator/developer. Only these buildings’ uses would change – the visual appearance, quality of materials and public realm will not differ significantly from the previously consented scheme.
Residential units to replace the consented ‘Network' office building. Spurtle understands this structure may be slimmed down, reducing the number of single-aspect properties (with openings on only one side).
Work on the residential blocks 1–5 to start in the first three months of 2025 ‘once we have secured a main contractor’.
Construction of the mid-market-rent (MMR) units to start in 2025.
The number of private-for-sale units to rise to around 200 (TBC).
The number of affordable housing units to remain the same, which – as a proportion of the overall development – is higher than the developers are technically required to deliver.
Public exhibitions of the new proposals and briefings for local community groups and stakeholders will follow, with a pre-application notification (PAN) event expected later this month in Broughton St Mary's.
Difficult times
Ross McNulty, Development Director for Ediston, blames the ‘double-whammy’ of construction-cost inflation and rising interest rates for the rethink. He says the cost of development finance has also depressed the value of commercial buildings.
But even more crucial, he adds, has been the effect of the Scottish Govt’s commitment to rental restrictions. ‘This has effectively killed-off the funding market that underpinned both the investment and delivery of BTR projects. As such, BTR projects in Scotland are no longer deliverable for the foreseeable future.’
First thoughts
Many locals will baulk at the prospect of additional students arriving in the area. We understand from another source that as many as 550 beds are envisaged under the revised plans. Given the number of students who already live in the area (with more arriving soon), there are concerns about distortion of community balance.
Many will deplore a lost opportunity to provide settled homes at a time when Edinburgh faces a housing crisis.
Ediston is at pains to point out that the external appearance of the proposed PBSA will remain unchanged. But it is the changed internal configuration of the structure which would make it financially viable … at least in the short term.
PBSA is not a risk-free investment. As Spurtle discusses this month in Issue 343 (p.2), student numbers are subject to international pressures and can fall as well as rise. Empty or underused PBSA blocks cannot easily be converted for permanent residential use.
The aspiration to begin work on residential blocks 1–5 in Q1 2025 is contingent upon securing a main contractor. As we have seen with the delayed start of construction at Powderhall, in the current financial climate this process is fraught with difficulties. We would not be surprised to see further delays ahead.
Some residents along Fettes Row and Royal Crescent have suffered structural damage to their properties during work to prepare the development site. They have been concerned that delays to the project might signal Orion and/or Ediston walking away, leaving them with no opportunity to seek redress as currently agreed. It seems that those concerns can, for now, be put to one side.
More details about the latest New Town Quarter proposals – originally budgeted to cost around £250m – will become clear soon. In the meantime, given the fragile state of the market, the precarious condition of the economy, doubts about the continuing flow of overseas students to the UK, and vagueness surrounding who will actually undertake the work and when, Spurtle is not confident about the project’s overall viability.
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