Proposals for a giant canalside scheme to build flats, shops and a gym a mile away from Birmingham city centre have been lodged.

The scheme, called Soho Loop on the old BCN Main Line canal, aims to transform 12 acres of land near City Hospital with 504 new homes and a new cycle bridge.

It would see a host of vacant Victorian buildings, including the former Birmingham Arms pub, razed to the ground to make space.

City and Provincial Properties (CPP) has lodged an application with Birmingham city centre for the work, which would help to ease a major housing shortage in the city.

The site borders the larger Icknield Port Loop area and its development would bring impetus to canalside development in the city.

The plans include 65 affordable dwellings, as well as a large data centre to house telecommunications and digital storage systems.

The remainder of homes will be retained for long-term rental, rather than being sold on, which CPP said was in demand in the city.

The plans state: “The proposals therefore represent a long term investment, providing high quality and well managed accommodation, with tenant friendly leases, which is vital to the commercial success of the PRS or ‘build-to-rent’ model.

“It is a bold, ambitious and exciting project, addressing one of the city council’s highest priorities, to deliver well-managed, good quality private rented sector housing stock within the city. The project is an innovative response to changing needs and lifestyle choices and will assist with the retention of graduates and key workers in the city, whilst supporting inward investment decisions of key employers in the city region.”

The Greater Icknield Masterplan , part of the draft Birmingham Development Plan, last year outlined plans for 3,000 new homes and 1,000 new jobs there.

SR Davis Architects, which drew up the plans, said the project would bring a “redundant site into productive use”.

The work would see a mixture of Victorian industrial buildings, along with a large chimney stack, knocked down.

That will open up about 325,608 sq ft of floorspace across six main development plots, with three blocks fronting Dudley Road.

The proposals are for 57 city pads, 164 one-bedroom apartments, 256 with two bedrooms and 37 with three.

There will also be 11,409 sq ft of retail space across four units – which could also be bars or restaurants, as well as a 5,866 sq ft gym fronting on to Dudley Road.

CPP also proposes 456 car parking spaces.

The plans say the 80,000 sq ft data centre, housing telecommunications, and digital storage systems, would be hidden to the rear of the scheme.

The planning statement adds: “The site’s strategic importance within the chain of identified redevelopment opportunities is recognised within the Greater Icknield Masterplan, especially in its potential to provide pedestrian and cycling linkages between key development areas.

“As such, this site is a great opportunity for investment and regeneration.”