The formal recognition of Edinburgh as one of the world’s most beautiful cities is under threat amid a battle for the soul of its most historic quarter.

The city was inscribed as a Unesco world heritage site in 1995 for the beauty of its medieval old town and 18th-century new town but, following complaints from the public and architectural experts over a number of new buildings, inspectors from Icomos, the International Council on Monuments and Sites, which advises Unesco, have toured several of the most contentious sites.

Most of the concerns are focused on the east end of Princes Street, in the shadow of one of the city’s most famous landmarks, Calton Hill.

A 1973 concrete shopping mall, felt generally to be an eyesore, is finally to be demolished. But the planned replacement has caused alarm among many of long-suffering citizenry. More than 40,000 square metres of shopping space, along with private apartments, office blocks and a theatre is to be built. The centrepiece of this £850m development is a massive hotel which the developers would like to be regarded as a ribbon unwrapping a gift. Some local people, however, have bestowed on it the uncharitable appellation “the Turd”.

A few hundred metres away, sculpted into the soil of Calton Hill, sits the Royal High School of Edinburgh, one of the treasures of the old town and whose sentinel, neo-classical gaze accompanies the visitor all around this part of the city. Improbably, plans are afoot to turn this into yet another hotel for the elite. The plans envisage two free-standing extensions to the Thomas Hamilton-designed school which critics say would give it the appearance of a giant Mickey Mouse head looking down on the city.

On Leith Walk, as it rises to meet Princes Street, award-winning novelist Candia McWilliam is heartbroken at what has already disfigured her beautiful Edinburgh and the prospect of what may yet befall it. Her father was the noted architectural writer, Colin McWilliam, who toured the UK to write about the country’s most beautiful and important buildings.

Her home lies in the shadow of the St James development and she is dismayed at what it will do to the city’s skyline. “The architecture of a city ought always to be the result of a conversation between the old and the new. The hotel that is being built up there is like a loud, boastful, braggart bullying everything that comes into its view,” she said.

A computer image of the controversial new hotel on the St James development. Photograph: Jestico + Whiles

“Dad was a modernist, and probably far more daring in all regards than me and he believed (and I agree with him) that there is a place for architectural ‘brutalism’; in its place. These designs – the ‘Ribbon’ Hotel, the Inca Terraces on Calton Hill, and the Caltongate development, aren’t even monumental or serious or sublime or grand; they have a thinness, an ornament-ledness, that is perhaps graphically envisioned and somehow even, I would hazard, ‘screen-conceived’.

David Black, a conservationist and architectural critic, detects a sinister hand in the planned developments and others that have occurred with seemingly indecent haste around Edinburgh. “The cataclysmic event as far as I was concerned was the wrecking of St Andrew Square last year and two wonderful, B-listed buildings within it, to build a TK Maxx and offices for Standard Life, all of which was dusted under the carpet,” he said.

“Edinburgh is in crisis financially as a result of the tram catastrophe and the losses arising from a property repairs scandal. They’re trying to deal with this with a number of panic measures, like extending parking controls to late night and through Sundays to raise more revenue and doing all sorts of events deals in public spaces like Princes Street, St Andrew Square, and the Meadows. They’re also pimping the city to global investors like TIAA-CREF of North Carolina.

“If you are an international developer there has never been a better time to open up in Edinburgh and to get past planning protections for its built heritage.”

Councillor Ian Perry, planning convenor on Edinburgh City Council, said: “Unesco heritage status does not preclude ongoing development to keep the site active and vibrant if it is deemed to be appropriate.”

Black, meanwhile, has made several representations to Unesco about the demolition of listed buildings within the protected zone but his concerns were ignored. He is hopeful though, that the Ribbon Hotel and the Aztec theme park on the Calton Hill will see his city stripped of its Unesco status. “My city simply no longer deserves to have it,” he said.