Plans for a £80 million development in the heart of Glasgow were announced yesterday, just as Edinburgh pulled the plug on one of its largest projects.

The Savoy Centre, the dated shopping precinct in Sauchiehall Street, is to be pulled down and replaced with a 30-storey landmark featuring a 221-bedroom hotel and restaurants with panoramic views of the city. There is also to be 6,000 sqm of office accommodation. The work will involve the demolition of an unloved walkway over Renfrew Street to the Royal Scottish Academy of Music and Drama.

On Tuesday it was revealed that Edinburgh's £800 million Caltongate project was in doubt after the company behind the project went into administration.

Developers in Glasgow are nevertheless optimistic about their scheme to replace the two-storey, mid-1970s Savoy Centre.

Damien Mitchell, property director of PNB Properties, the Belfast-based company behind the project, said that the time had come to revive and expand the Savoy Centre.

“Our proposals will provide an array of new amenities, including a hotel, restaurants and office space, as well as creating a new landmark building for Glasgow city centre and improving business opportunities for existing tenants.”

The developers hope that 200 jobs will be created during the construction work, with another 900 jobs on completion of the scheme.

Mr Mitchell said: “One of the things that was most welcomed in our discussions with local stakeholders is the removal of the unsightly footbridge at Renfrew Street. This will bring much improved views along this street and will lift the general amenity of the area.”

Scott Taylor, of Glasgow City Marketing Bureau, welcomed the investment. “We have been meeting with PBN for a number of months and have followed the progress of these proposals,” Mr Taylor said.

“If Glasgow intends to compete and win on a world stage, it needs to continue to attract major investments such as this, and the inclusion of a hotel within these plans will enhance the city's ability to meet growing demand, especially in the lead-up to the Commonwealth Games in 2014."

Gordon Matheson, a city councillor, said: “This is the latest in a series of major boosts to Glasgow's economy and is a welcome fillip to the Sauchiehall Street part of town.

“Those who make these investments could take their money anywhere within the UK or beyond. That they choose to spend in Glasgow is a great vote of confidence.”

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