The deal, which is believed to be in the region of £20 million, will see the Liverpool-based developer take ownership of the site when patients and staff move to a new £150m facility next year.

The Royal Hospital for Sick Children is an iconic site that spans over 1.62 Hectares (4.01 acres) in the Marchmont, Meadows and Bruntsfield conservation area and includes a range of listed properties. Ownership is split over NHS Lothian and Edinburgh and the Lothians Health Foundation charity.

Six bidders were invited to provide further information before the owners selected the winner.

The proposed move to the new location at Little France has been hit by delays despite being originally scheduled to open this autumn.

That was put back to February next year and the project is now expected to be completed no earlier than May 2018.

Jacquie Campbell, chief officer for acute services at NHS Lothian, said: “The decision to move the services from the current site and dispose of the site was not an easy one to make. The legacy of the Royal Hospital for Sick Kids dates back to 1863 and since 1895 the hospital at Sciennes Road has been home to thousands of children and their families in the building many have grown to call ‘the sick kids’.

“Although the site has a developer lined up to take ownership of the site, patients and their families can rest assured that no changes will be made to the current facilities until they are set to move to the their new location in the £150m Royal Hospital for Children and Young People and Department of Clinical Neurosciences, Little France next year.”

David Fraser, partner with Ryden, adviser to NHS Lothian, said: “The property was put up for sale in November 2016 and naturally generated a great deal of interest which resulted in 21 formal bids being received in early 2017.

“After carefully consideration, six bidders were invited to provide additional clarifications whereby the Downing Groups was selected as preferred bidder.”

Community group Marchmont and Sciennes Development Trust (MSDT), proposed a community buy-out for the site to be used for healthcare provision, quality affordable housing and infrastructure for community enterprise, said it was “gutted” that the application had been thrown out.

A MSDT spokesperson, said: “We are gutted that we have not even had the chance for our application to be judged by the Scottish Government, which appears to be in the dark about this sale.

“This application was considered as an ‘acid test’ for the new urban right to buy laws and we feel very disappointed, as will many people in the community around the Sick Kids, that we did not get the chance to show how it would work.

“The reality of this decision is that only the bare legal minimum of the sorts of things local people suggested for this site – such as the affordable housing, more space for the local school and community facilities – is likely to happen now.”