Plans for the £40m mixed-use redevelopment of the derelict Cowgate district in Edinburgh have been approved by the city council.

The SoCo scheme, led by Edinburgh developer Whiteburn Projects and designed by Allan Murray Architects (AMA), is set to transform the site which was ravaged by the Edinburgh Old Town fire in 2002. Located in South Bridge/Cowgate, the site will host a 200-room hotel, operated by boutique hotelier, Hoxton, which is led by the co-founder of Prét a Manger. There will also be a new restaurant, festival venue, business centre and a La Belle Angele nightclub – which was destroyed in the fire.

John Shepherd, chief executive of Whiteburn, said: "Our vision is to regenerate this blighted area of our beautiful city which has lain derelict since the devastation of fire in 2002. This part of the Cowgate was once a vibrant part of the Old Town, catering for the needs of many, and we are delighted that we can soon begin work redeveloping the area, making it an integral part of Edinburgh's urban offering once again. "We will continue to work hard with the planners and the council over the next few weeks to iron out the few items of reserve and ensure the site is transformed into a premier destination for people to stay, work and relax in the very near future. We are now well on the way to transforming this long-standing gap site, providing local jobs - and hopefully kick-starting the regeneration of the whole South Bridge/Cowgate area."

Allan Murray of AMA added: “SoCo will be a collection of buildings in sympathy with the contrasting urban grains of Chambers Street, South Bridge and the Cowgate, complemented by a network of closes and vennels. A series of courts, terraces and entrance spaces at different levels, with different uses, will bring vibrancy to the area." The site was previously host to the J&R Allan department store, which incorporated the Gilded Balloon comedy venue, Bridge Jazz Bar and La Belle Angele nightclub.

Subject to the granting of the necessary liquor licences and building permits, the project is expected to be completed in 2011. Details:www.soco-edinburgh.com/