REVIVED plans to develop a derelict gap site in the capital are expected to create 2500 jobs and provide 145 new homes, according to the developer.

An international ­consortium headed by Artisan Real Estate Investors outlined its proposals for the Caltongate site in Edinburgh city centre.

The revived Old Town gap site is expected to generate about £43 million for the local economy a year, it said.

Artisan's plans include a £150m mix of leisure, retail and offices linking New Street and East Market Street with Waverley station and the Royal Mile.

It will be centred around a £6.5m civic square with office space, 400 hotel bedrooms, 28 retail units, 145 residential units and 40 affordable homes. The site is expected to create 1750 new jobs and 720 construction jobs in its building phase, planned to start in spring.

An 18-month consultation has led to many historic Old Town buildings being retained, include Canongate Venture and the facade of the Old Sailor's Ark. Views of Calton Hill from the Mile will be preserved and the Jeffrey Street arches will be retained as artisan units.

Artisan managing ­director Lukas Nakos said: "This planning application marks a significant milestone in the evolution of one of the most challenging city-centre developments in the UK.

"We now have the ­opportunity to create one of Europe's most exciting and vibrant mixed-use communities, which will set an international benchmark for sensitive and innovative development.

"We feel we now have a proposal which balances ambitious and flexible commercial priorities with a genuine understanding of the area's community and civic context.."