£2m Meadowbank black hole

THE project to rebuild Meadowbank Stadium is facing a major funding gap after property experts warned that the council has over-estimated the value of the land.

The council plans to bulldoze the existing stadium and sell a third of the land for housing, which it expects to bring in around £17 million.

On top of a £6m sum set aside in this year's budget, and an anticipated £2m grant from sportscotland, this would allow the council to build a £25m replacement on land to the east of the site.

But Roy Durie, senior partner with Ryden property consultants, today said the current state of the UK's economy has seen the value of land for residential development plummet. He estimated that the 8.6 acres of land at Meadowbank would fetch £1.75m per acre at most – leaving a shortfall of at least £2m.

"A price of £17m is very optimistic, particularly if the developer has to provide 25 per cent affordable housing and pay a contribution to the tram scheme," he said. "In real terms, it's never going to be as good as 2007 again.

"The only thing that could save the council is the fact that the site will not actually be available for redevelopment for two or three years, when the market might be coming back."

Jason Hogg, director of development land at property firm Jones Lang LaSalle, added: "The land value would depend on the mix of proposed house types on the site, whether it be flats, townhouses or lower density family housing. However, my initial reaction would be that this figure sounds optimistic, particularly given the current market conditions for lending and housing.

"The requirement in Edinburgh for affordable housing will also further dilute the value of the land. Despite this, I expect interest in the site from developers, given its location."

The decision to sell land at Meadowbank, which was a major issue at last year's elections, was taken by councillors in March.

Campaigners remain bitterly opposed to any sell-off, and the council can expect hundreds of objections when a planning application is submitted.

Tory group culture and leisure spokesman Gordon Buchan and Labour counterpart Paul Godzik today said the warnings from property experts are "of concern".

"Land values are dropping in the current climate, and this is a worry," Cllr Buchan said.

"How on earth do we deliver national sporting facilities when this part of the funding may be inappropriate? The council needs to raise money somehow."

But a council spokesman said: "The current value of this prime city site has been assessed using professional advice and includes our architects' views on land use. Based on this, our target remains £17m and we believe this is achievable. However, the final value will determined by the planning process and the market at the time of sale which is some way off."

The warning comes just weeks after the Evening News revealed that the major revamp of the Royal Commonwealth Pool is also facing a funding gap. The plans were reliant on a £6m receipt from the sale of Spartans FC's former City Park ground, but councillors on the planning committee recently voted to scale back the development. This, coupled with concerns about the global "credit crunch", have left a £3.5m black hole.