A MAJOR £200 million development is to be built on derelict land in Edinburgh's Haymarket that had once been considered for the site of the Scottish Parliament.

The land, which has lain dormant for years, is to be turned into a hotel, offices and shops after full planning consent was granted.

It is hoped that the project, at the former rail goods yard, will help reinvigorate an area of the capital which has been badly disrupted by ongoing tram works and the economic downturn.

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Original plans for a 17-storey hotel next to Haymarket station were scaled down following local protests.

Plans to redevelop the area were resurrected after construction company Interserve came on board with the landowners Tiger Developments.

Interserve will initially invest £10.5m in the project while the construction contract is for £150m.

Construction is likely to start near Haymarket station this summer, creating 250 jobs.

Tesco and serviced apartments provider Staycity have already signed up, while food chains Prezzo and Pret A Manger are also on board for the project.

Adrian Ringrose, chief executive of Interserve, said: "Edinburgh's Haymarket site remains one of the best city centre development schemes to be found anywhere in the UK.

"It will provide a strategic gateway for the city centre, linking seamlessly with one of Scotland's busiest railway stations as well as being adjacent to the city's new tram network.

"The proposals for a mix of leisure, retail and office space, linked by open public spaces, will act as a catalyst to regenerate the commercial heart of the area as well as create jobs."

Simon Fox, development director with Tiger Developments, said: "Throughout the planning process we have worked hard to develop our proposals in line with the needs of the city and the local community.

"Our team has devoted a significant amount of time and energy so far in designing a scheme which now represents the best solution for this challenging site.

"So far we have received significant commercial interest in the site from a wide range of UK operators, on top of the existing tenants already signed up."