Credit Crunch biting in Edinburgh

The Independent Republic is full of jolly souls and we don't want to be like Cassandra of Greek Tragedy but we want to know what the city is planning for the recession.

We are being told that the average salary is reducing in Edinburgh and firms are cutting back on their staff particularly solicitors selling houses, builders and architects even award winning Malcolm Fraser had to let staff go in August according to reports in the Evening News.

Malcolm Fraser's design for Market Street/Jeffrey Street

What plans do the council have for the credit crunch or to be precise the recession that is coming? There is a plan to build up to 7000 new affordable homes see here but when will they get built? Affordable homes are what is needed in Edinburgh not empty luxury apartments as suggested by Mountgrange. It appears that Mountgange did not acquire the land on Calton Road where the affordable housing is to go meaning they are not working to their Section 75 agreement, to build 25% of social housing on the site. When will the affordable housing on Calton Road be built?

Meanwhile the Waterfront is not doing very well, the land has decreased from £32 million to £14 million in 6 years and the development won't be ready until 2023, one of the builders has gone bust and the developers can't sell the houses. What's the council's plan? To offer loans to those who find it difficult to get a mortgage and sell them a Waterfront home at a "fair price" (but if the houses are not "sellable" then they are not worth anything!). The council is also toying with removing Section 75s from developers so they do not have to build social housing, roads, infrastructure etc etc to encourage further development.

There's also worries that Edinburgh Airport might decrease because of the crisis' in the banks read here.

So with the Waterfront Development slowing down and Edinburgh Airport shrinking (if reports are to be believed) why are we having a tram from the Waterfront to the Airport at a cost of more that half a billion pounds???

We need a sustainable plan for Edinburgh - a plan that ensures that everyone has a home, access to schools that are not overcrowded, a transport system that does not grind to a halt and has a sustainable future to meet the needs of everyone in the need not just the rich and greedy. Is there anyone out there with such a plan?

Council Denies Credit Crunch Happening

"Latest Council Meeting"

With TV programmes showing such as "Repossession, Repossession, Repossession", "Property Snake", and " How little is your house worth now?" the City of Edinburgh Council are clearly not living on the same planet as the rest of us, but neither are their pals in the property business.....Edinburgh Revamp Still On

Most disturbing is that they are not content with cloning the city, they have started cloning themselves.

"City leaders say the projects will create a "modern 21st century capital city in which to live, work, invest and visit".

Now what is wrong with " Edinburgh is a beautiful historical city, a vibrant 21st century capital which people can live and work in , and people enjoy visiting and doing business in"

"Well he would say that, wouldn't he"

Mandy Rice Davies as she leaves the court, famously saying "well he would say that wouldn't he" in retort that Lord Astor denies what she is saying!


There are rumours going about that Mountgrange are to pull out of the Canongate which they refer to as Caltongate - a little birdie told us that they don't have the money or investment.

However, at the Republic we have concerns that in this economic environment that Mountgrange will demolish further parts of East Market Street and New Street, to land bank it and hoping for the economy to get on its feet. A bigger and wider empty brown site really is not needed or wanted particularly in the World Heritage Site - it would be a disaster and cannot be allowed.

Have Mountgrange got the finance for their project? Further demolitions should not be carried out without knowing if the finances are secure? Sofitel may have a written agreement with the council and Mountgrange however they will not want to be surrounded by empty new builds that cannot be used. Sofitel is the hotel and conference centre however they are not funding or part of the "luxury apartments" or "luxury retail and offices".

The finance world is in free fall just now. Bradford & Bingley looks like it will have to be nationalised, HBOS has been bought out, finance companies and banks throughout the world are collapsing. I don't want to point out the obvious but who is going to finance Caltongate?

Mountgrange have told us it is a £330 million project. Where is the £330 million coming from? Developers borrow money to build buildings then sell them on. Where will they get £330 million from? And who are they planning (apart from Sofitel) to sell the rest of the development on to?

The council has sold the land off market for a cool £5 million however they do not get any profit share until the whole thing is sold. Some economists are saying that property is over valued by 40% - the council may see very little return for its investment - if indeed it goes ahead. The council is predicting brutal times ahead and it looks like Caltongate is their great hope to indicate that the capital city hasn't come to a halt - see here

However Mark Cummings Invictor PR spokesperson has vigourously denied rumours that Caltongate are pulling out, see here . However we have heard such denials before and in the immortal words of Mandy Rice Davies in th Profumo affair in the 1960s see here "well he would say that, wouldn't he?"

Waterfront value plummets

Larry the Lamb lived in Toy Town but you would think our esteemed city fathers and mothers were aspiring to knock the unique stuffing out of Edinburgh to turn it into their sanitised version of Toy Town - a town where everything looks the same, with no character and looks like a new town of the 50s and 60s - housing in East Kilbride and Cumbernauld Shopping Centre.









The Evening News reports that the Waterfront in Leith, whose masterplan was approved in 2001 has gone from having a land value of £33 million to £14 million - quite a depreciation. We were told it was the great hope for Granton -and Leith, the reason we needed a tram in Edinburgh. The Waterfront development was the triumph of city planning - but their greed caught them out - too many one and two bedroom houses glutted the market and there is a great demand for family housing - they have have had to adapt to the market. Read about it here

For further information on JUMP - campaign about the Leith Development follow the link here

With Lehmann Brothers collapsing in the States - will there be any banks that will be able to lend money to these developments, never mind Caltongate. In a recession do we really need 5 star hotels, conference centres and more new build "luxury apartments" - Edinburgh knows what it needs - affordable family housing with an infrastructure to support it. The Canongate could be developed keeping it's World Heritage Status and injecting people and families into the residential part of the city centre. If the profits go from the Caltongate development - what arethe council's plans? To rent out the council housing that has laid empty being left to rack and ruin, open up the Canongate Venture, to develop the land where the bus station was to be affordable housing?

The credit crunch is turning into a recession - the worse seen in more than a generation. Some say that Caltongate is not going ahead as Mountgrange don't have the money - so if that is the case we want to know what the council plans for a fall back position?

Caltongate Plans Crushed?

City builders hit a brick wall as crunch bites

THE building of thousands of new homes in the Capital is in doubt as the credit crunch brings the city's construction industry to a virtual standstill.

Major developments are being mothballed across the city, with a string of building sites lying empty along the Waterfront and the city centre in particular.

Full story here Evening News 18th Aug 08

Cash for Caltongate?

UK businesses face biggest cash flow crisis in two decades

British businesses are heading for the biggest cashflow crisis since the last recession, prefiguring a major slump in corporate spending and potentially pushing unemployment up by almost 1m, experts have warned.

In what economists have described as a "clear recession warning", the spare cash available to British companies has fallen to the lowest level since the early 1990s. Companies are also digging into their credit facilities at the fastest rate since 1992, when the country was last in recession.

According to figures from the Bank of England, the amount that companies had in available, unused credit facilities dropped by 13.3 per cent in the 12 months to June.

In May alone they dropped by just under £23bn - the biggest one-month fall since records began in the late 1980s.

Peter Spencer, economic adviser to the Ernst & Young Item Club, said such an outcome seemed inevitable. "When banks don't have enough money to lend to each other, why should they lend to anyone else?

"This recession started in the housing market but it is spreading like a virus. And now it is the corporate sector facing severe pressure.

This is a very worrying further step towards the edge of the cliff."

Full Article here -Telegraph 2nd Aug 08

Credit Crunch Caltongate

With almost daily headlines like the following,

what will become of Caltongate ?

Negative equity threat to 1.7 million properties


"there will be some, especially buy-to-let investors who have purchased inner-city "regeneration" flats, who will be very badly burnt, losing perhaps half of their stake to negative equity in the worst cases. "
The Independent 31st July 08


Insolvencies at 'all-time high'


Business liquidations
Meanwhile, figures also showed that the number of Scottish businesses falling into liquidation rose by almost 30% in the second quarter of 2008.

In Scotland, the number of businesses going into liquidation topped 132 between April to June, compared to 102 between January and March this year.

According to Blair Nimmo, head of restructuring for KPMG in Scotland, "there can be little doubt that the credit crunch is now really beginning to bite".

The worst failure rates in Scottish business came from the property, construction and real estate markets, which saw 60 businesses go under, while hospitality saw 12 and retail saw 11.
BBC News 1st August 08

Credit Crunch Casulties Continue

Will this happen to Crooked Caltongate? Time will tell......The following will ring a few bells....

Credit crunch threatens Gehry's Hove scheme

2 July, 2008 Building Design By Marguerite Lazell
Frank Gehry's controversial scheme for the Hove sea front has been thrown into doubt because of the credit crunch.

Karis, the developer of the £290 million scheme to build 750 apartments and a leisure centre, admitted on Tuesday that the economic downturn could scupper the project.

Managing director Josh Aghiros told BD: "At the moment, due to the economic climate as it is, we’re doing a viability study. There’s no conclusion. All options are open.

"With the way house prices are any major development in the country is in this position."

The scheme was granted planning permission on the casting vote of the chairman of the Brighton & Hove Council planning committee in March 2007 after local opposition to the scale of the development.
On Tuesday, Gehry confirmed his involvement with the project was over. In an interview in the Guardian with BD columnist Jonathan Glancey, he said: "Don’t go there. It was a painful experience. I guess I never did understand your planning system and all those interfering government design advisers."

Aghiros commented that the King Alfred project was not the sort of scheme Gehry was used to working on. "The major projects that Frank Gehry has done have been funded by philanthropists, or institutions," he said. “This is a commercial proposition that needs to stand on its own feet. If it’s viable we’ll proceed.”
Aghiros said a final decision about the future of the project would be made by the end of July.