Building work has begun on a luxury new NZ$33m four star hotel in Edinburgh’s Old Town, as part of the city’s plan to provide more luxury accommodation for future visitors.

The 98 room luxury hotel is the first venture in Edinburgh by European operator, the Carlton Hotel Collection, and is being developed in partnership with property development and investment firm EDI Group.

The development, situated within the UNESCO World Heritage and Old Town Conservation Area, will see the transformation of a key underused site on Market Street, which has remained vacant for more than 50 years.

Due to open in spring 2018, the hotel will feature a top floor lounge with panoramic views across the Waverley Valley from Princes Street Gardens to Calton Hill.

Councillor Gavin Barrie, chair at EDI Group, said delivering an outstanding luxury hotel in the heart of Edinburgh’s Old Town is a “significant moment” for the city’s tourism and leisure industry.

“The design of the building carefully balances old and new to support the city’s heritage status and we’re delighted that a key underused site for the city will be brought back into use for residents and visitors to enjoy,” Barrie said.

Alfred Bree, managing director of the Carlton Hotel Collection, said “The interior design of this hotel will reflect the heritage of the location and will meet all demands of the international modern traveler.

“All at Carlton Hotel Collection are looking forward to the successful development of this historic site and to welcoming all in spring 2018.”