The property was marketed at a guide price of £7.5 million.

The Dunstane Houses, dating from circa 1851, is situated in Edinburgh’s West End offering 35 guest bedrooms and suites set across two villas. The property boasts a bar and restaurant, lounge, garden conservatory and private gardens.

The sale follows £25m of Edinburgh hotel transactions already traded in 2022, Savills says, including the sale of Apex Haymarket, Fountain Court Apartments and Travelodge Edinburgh Learmonth.

Steven Fyfe, associate director in the hotels agency team at Savills Scotland, commented: “The Dunstane Houses is a prime investment opportunity that presented a luxury boutique hotel recognised as one of the finest in Edinburgh with significant potential for ongoing success.

“Edinburgh continues to outperform as a tourist and business destination that maintains a buoyant hotels market and we expect these robust fundamentals to support further transactions.

He added: “Furthermore, the recent openings of the Gleneagles Townhouse and Virgin Hotel, as well as the upcoming entrants of the W Hotel & Roomzzz at St James Quarter, Red Carnation will bolster the city’s hotels product and broaden the appeal of the city to travellers.

“However, against wider uncertainties in the investment market, it is essential to take advice at an early stage, whether considering an exit or further acquisitions for your portfolio. Live sales are generating strong interest, but price the of debt will challenge higher lot sizes. ”