A property on Edinburgh’s Cowgate is being bought for £4.3 million by contemporary hostels operator Safestay, which plans to refurbish it and create a 225-bed location.
The deal marks a return to the Scottish capital for Safestay, which has a presence in Glasgow.
The company, which is on the Alternative Investment Market, noted that the freehold property on Cowgate had “until a few years ago operated as a hostel”.
Once completed, the hostel will offer 225 beds in a variety of room combinations “typically ranging from two to eight-bed rooms, some with ensuite facilities”, Safestay noted.
The international hostels operator described the property as “an attractive and spacious grade A listed building located in the heart of Edinburgh on Cowgate…well known for its lively bar and cafe scene”.
Safestay said: “Arranged over six floors and covering 30,000 sq ft in total, the first three floors previously operated as a hostel, whilst the upper three floors are let to two tenants until 2038 generating £133,000 in rent per annum.”
It added: “The tenants are The Society of Advocates and the Solicitors Society (who are the vendors), and the building is adjacent to the law courts.”
Safestay declared the building “requires general refurbishment to make it ready to reopen in advance of the key summer market next year”.
It added: “Edinburgh is a city the company knows well, having owned and operated a successful 615-bed hostel for six years in this city until the pandemic in 2021 when it was sold for £16 million. Edinburgh is a leading European city, attracting large numbers of tourists and visitors every year, many of whom are looking for central and affordable accommodation.”
Safestay noted the consideration for the Cowgate property would be met from its existing cash resources.
It said: “As a result, the group’s hostel portfolio now consists of 17 operating hostels and, with the addition of Edinburgh, the number of beds across the portfolio increases to 3,476.”
Chairman Larry Lipman said: “We never wanted to leave Edinburgh for long and are delighted to return and link up with our other Scottish site in Glasgow. Edinburgh is a truly stunning city and a key destination for millions of young travellers to visit. The property is superbly positioned right in the centre with easy access to all the main attractions and we feel confident, knowing this market as we do, that it will be a strong contributor to the group.
“Our trading performance over the last 18 months since we have been allowed to trade post-pandemic has shown that our market is in good health. Demand and pricing have demonstrably increased, which will increasingly benefit us as we expand the portfolio with excellent sites such as this.“
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