Interest from a hotel operator could be the lifeline needed to kickstart a £150 million Digbeth regeneration scheme.

The first phase of the Beorma Quarter project, which is being backed by Kuwaiti money, was due to begin in late 2012, after a deal was struck with an as yet unnamed operator for a new hotel on the corner of Digbeth High Street and Park Street opposite the Bullring.

The first phase will also see the transformation of the Victorian 35,000 sq ft Grade II-listed Cold Store building and eventually the project will include a 27-storey tower as well as the restoration of further listed buildings and new public spaces.

Keith Williams, who represents the Kuwaiti-based Salhia Real Estate in the UK and introduced them to the Birmingham opportunity, said securing the first occupier for the site was the catalyst to get the project off the drawing board and into reality.

He said: “This project was always going to move ahead on a pre-let basis so to secure a fantastic operator to the development means we can now get on site later this year.

“We have also secured development funding for the project from HSBC after a competitive three-way tender, which is unusual in this climate, while £18 million has already been invested to get to where we are today.”

The Beorma Quarter plan, named after the man who founded Birmingham in the seventh century, was first mooted four years ago but the challenging market conditions and the complex nature of the site between the Bullring, St Martin’s Church and Selfridges have added to a more protracted process than originally anticipated.

The development is in one of Birmingham’s most historic areas. Archeologists have discovered evidence of activity stretching back to the 13th century, with the site containing some of the city’s last surviving remnants of the medieval property subdivision system, characterised by groups of long, thin plots known as burgage plots. The design of the proposed tower is set to pay tribute to that heritage.

A state-of-the-art geothermal system called Aquifer Thermal Energy Storage (ATES) will also tap into ancient wells beneath the area and heat the scheme through six 100-metre energy boreholes.

Heat from each building will be extracted in the warmer months, creating a cooling effect, and this will be stored in the water below and extracted in winter for heating, cutting energy use significantly and CO2 emissions by at least 25 per cent.

“This will be a first in Birmingham and one of only a couple of similar geo-thermal schemes anywhere in the UK,” said Mr Williams.

“With the geothermal power source and bringing back to life the derelict Cold Store building as a business centre, we are not only creating one of the most sustainable developments possible but also a scheme that fits the city’s international outlook.”

The progress on the Beorma Quarter scheme will be a welcome shot in the arm for Digbeth, which has suffered a number of setbacks in its regeneration in recent years including Connaught Square.

The Facts

Area: Digbeth

Investment: £150 million

Size: 27-storey tower

Developers: Kuwaiti-based Salhia Real Estate

Development type: Mixed use, hotel