PLANNED property developments in the Capital face being scaled back, delayed or even cancelled as lending continues to dry up, property experts said today.
At least three major office redevelopments have been postponed as company's struggle to secure funding and act with caution about market conditions.
Plans to transform a 1960s office block that used to house the Job Centre on Torphichen Street int
o new environmentally- friendly offices are set to be put off for up to three years.
And redevelopments of nearby Osborne House and Rosebery House are also understood to have been put on hold, despite having won planning consent.
The news comes after plans for new commercial offices on the site of the former Scottish & Newcastle brewery at Fountainbridge were halted last month, with developers understood to be considering whether offices are still right for the site, despite planning permission having already been granted.
Property experts have now claimed more developments are likely to be postponed as the credit crunch continues to bite the industry.
Stewart Taylor, director of CB Richard Ellis' business space consultancy, said: "I think the issue for developers is they're really being hit from all quarters.
"Costs have been going up for some time and many will have bought sites with estimated building costs and will now be facing much higher building costs.
"Yields have moved as well and the straw that broke the camel's back now is that companies are not able to get the lending from the banks."
He added: "I think there will be many other companies in the same position.
"The best buildings in the best locations will still be able to attract funding, but it is slightly different for those in other areas."
The Torphichen Street development would have seen an "eyesore" block replaced with 40,000 square feet of open-plan accommodation with environmentally-friendly features including solar-powered heating and natural ventilation.
Despite the scheme winning approval at a planning committee meeting in April, developer Duddingston House Properties has now put the plan on hold and is to instead lease the existing office space to tenants on a short-term basis.
A final decision on the strategy is due to be made in August but it is expected that work will not begin for three years.
Bruce Hare, chief executive at Duddingston House Properties, said: "I would think that debt funding is very difficult without some form of pre-let.
"We're back to where we were 17 years ago. There's a lack of liquidity from the banks now.
"At least 17 years ago there was liquidity, but there is a banking crisis in terms of funding development work."
It is understood short-term leases have been secured at Osborne House on Osborne Terrace and Rosebery House on Haymarket Terrace despite refurbishment work being due to start.
But developers behind one of the city's largest and most controversial developments said it would still go ahead.
Mark Cummings, a spokesman for Mountgrange, denied there was any prospect of plans for the Caltongate scheme changing.
He said: "There is no potential at all for Caltongate to fall. It has been four years in the making, and subject to planning legislation for three years.
"We have worked hard to make sure it is right for the city."
The full article contains 558 words and appears in Edinburgh Evening News newspaper.
