Buy of the Week: Edinburgh

It's been noted that Edinburgh's 18th and 19th century building boom appeared to grind to a halt in the 1830s because "the money ran out somewhere along Saxe Coburg Place". Luckily, the builders had the cash for the job that architect James Milne started 10 years before and the result is now regarded as one of Edinburgh's finest Georgian squares.

Built using the city's distinctive grey stone, Saxe Coburg Place is named after Queen Victoria's consort, Prince Albert, and is in a quiet backwater just north of the centre, in Edinburgh's New Town. Nestled on the south side of this elegant sweep of houses is number 10 - a period house concealing a striking contemporary interior.

"We were looking for three years," says owners Tim and Fiona Shaw, "but there was nothing with the space and light we wanted. Then number 10 came on the market." The previous owners had undertaken a thorough restoration, even steam cleaning the cornice and ceiling roses to remove the layers and layers of old paint, only to repaint everything with a fresh coat of white.

"It was literally a blank canvas, just a shell. All the original details were there and we saw an opportunity to bring it right up to date."

The results of their year-long project are both sensitive and bold. Fiona, who trained in fashion design, opted for modern classics over traditional fittings and furnishings. The majority of the building work was carried out on the lower ground floor where dusty cupboards and cramped storage rooms were removed to create a light, spacious interior. The big statement piece of this level, though, is the glass garden room.

"Because we inherited a 1970s lean-to on the back of the house, Scottish Heritage was open to replacing it with something more daring," says Fiona. Two of the walls are floor-to-ceiling glass with sliding doors. These vast sheets of glazing allows the light and views to penetrate the kitchen and family room. "If there had been no extension, we wouldn't have stood a chance with this proposal. In the end everyone was thrilled with the look and tone of this new room."

The Shaws also created a self-contained flat on the lower ground floor that quickly became a money-spinner as an up-market holiday let. "We'd put a pint of milk in the fridge and hand over the key," Fiona enthuses. "The flat has its own front door, and it was particularly popular during the festival - I made £20,000 in the first year."

The next major project was rescuing the original turned-stone staircase from the omnipresent white paint, to reveal the soft tones of the stone beneath. This now-elegant staircase snakes its way up through the floors, giving a sense of the house's scale. The ground floor has a grand dining room overlooking the square and a library where you could hear a pin drop. There's also a well-planned laundry room tucked away at the back.

The first floor has a mixture of living and private space with a large drawing room cohabiting with two good sized bedrooms and a bathroom. The top of the stairs is crowned by a restored cupola. This Georgian trick-of-the-light illuminates the potentially dark stairwell, three bedrooms and family bathroom on the top floor.

The Shaws' decorative choices keep you guessing from room to room. From the futuristic kitchen and glass garden room to the matt Marmoleum and Jacobsen taps in the bathroom, period details and modern design blend seamlessly to create both a striking and comfortable home. Some of these furnishings will inevitably leave the house when the Shaws do, but their sensitive approach to design should provide the next owners with plenty of fresh ideas.

Outside, the house has a good-sized, south-facing private garden that gently slopes down to some original railings and on to the Water of Leith. To the front, the private square is accessed by a residents' key and is known for its very sociable annual fireworks parties and impromptu summer drinks.

Just off the square is the pedimented arch of Glenogle Baths, a restored Victorian pool that's open to the public, and a few minutes' walk away is Stockbridge, described by Fiona as "like Notting Hill was 10 years ago - an area being discovered, with lots of great delis and restaurants". The open spaces of Inverleith Park and the Royal Botanic Gardens are both nearby, and the city centre is only a five-minute drive away.

Edinburgh's New Town rose out of the prosperity of the mid- to late-18th century, as the combination of wealth, intellectual and political power prompted an explosion of new development. Edinburgh's Old Town was cramped and smelly, suffering from a lack of proper drainage that caused visitors to complain that they could smell the city as far south as Dalkieth, a distance of six miles. In 1766, six plans for this "New Town" were considered, and a scheme by James Craig was chosen, marking the start of several decades of building over which this grand project would take shape.

Saxe Coburg Place, along with Danube Street, Ann Street and St Bernard's Church represent some of Milne's finest moments, all acting as architectural endstops to the last throws of Scotland's Age of Enlightenment.

The Shaws are now moving back to Tim's family home in Berwickshire, marking another ending in Saxe Coburg Place. If development had continued in the 1830s, who knows where the edge of Edinburgh's New Town would be now, but it's possible that the last few stones of Scotland's idealistic and creative tidal wave were laid here, in this graceful period square set on a quiet bend in the river.

Get the spec

What's for sale: Grade B-listed Georgian townhouse with five bedrooms, three receptions, kitchen/family room, garden room, two bathrooms, laundry, cellars and garden. Interconnecting flat with living room, bedroom, kitchen and bathroom.

Where: 10 Saxe Coburg Place, a no-through road on the northern fringes of Edinburgh's New Town.

How big: 374sqm (4,025 sq ft)

Gizmos: Zoned central heating for each floor.

Buy it: Offers over £1.65m through Savills (0131 247 3710, www.savills.com) or Rettie & Co (0131 220 4160, www.rettie.co.uk).