A prominent Edinburgh office building has changed hands in a multi-million pound deal that experts said reflected strong investor interest in the city.

The BP Pension Fund has bought the Interpoint building close to Haymarket railway station from insurance giant Aviva for £18.95m.

The deal will give the pension fund control of an asset that is set to provide a secure long term income.

Interpoint is let to Royal London, the mutually owned life and pensions specialist, until 2029.

BP Pension Fund was advised by property consultancy Savills which said the deal provided a rare opportunity to buy Grade A office space in a city where the supply of office stock is limited and rents are rising rapidly.

“Edinburgh continues to be a key destination for investment in the UK,” said Savills director Rod Leslie.

He noted that investment giant M&G had shown faith in the potential of the Haymarket area last year, when it bought a gap site that had lain empty for years for £49m.

M&G, which is owned by another insurance heavyweight, Prudential, plans to build a mixed-use development featuring offices, hotels, shops, bars and restaurants.

Earlier this week a group of buildings on Edinburgh’s Rutland Square and Shandwick Place, near Princes Street, sold for around £16m. Sector watchers noted a lack of speculative office development in the city combined with strong demand for space.