M&G Real Estate has acquired a four-acre site called The Haymarket in Edinburgh for £49.1 million.

With a gross development value of about £280 million, the site has planning permission for the development of three Grade A office buildings totalling 350,000 ft², provision for 40,000 ft² of retail and leisure space, a 190-room hotel and a 172-room aparthotel.

The acquisition extends M&G Real Estate’s office development portfolio in Scotland and follows deals to fund the construction of Quartermile 3 and Quartermile 4 Edinburgh.

M&G said: “The site provides an opportunity to expand the Scottish capital’s growing financial quarter — the Exchange District — which is located next to Haymarket train station, connecting passengers to Glasgow and is also close to tram services serving Edinburgh airport.

“Edinburgh is a leading European financial and business centre and is home to more FTSE 100 companies than any UK city, with the exception of London.

“Edinburgh proved resilient through the financial crisis but the supply of office accommodation in Edinburgh is at its lowest for over 10 years – a situation unlikely to improve due to limited new supply.”

Chris Perkins, Head of Business Space, M&G Real Estate, said: “With the current supply/demand dynamics, bringing 350,000 sq ft to the market will reinforce the Exchange District as a prime hub for business in Europe.

“Whilst Edinburgh remains an attraction for heritage tourism, its rejuvenation as a business and leisure location over the past few years rightly places it amongst Europe’s leading cities.

“As a provider of investment solutions across geographies, sectors and product types, this investment reinforces our strategy of acquiring assets with potential for sustained income, strong capital appreciation located in targeted growth zones.”

Savills represented M&G Real Estate.