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Along with Waverley Station, the Princes Street Gardens are located in the steep, narrow valley between the medieval Old Town and the 18th century New Town.

This valley was formerly filled by a freshwater loch called the Nor Loch which became badly polluted by sewage and household waste as the Old Town became more crowded during the Middle Ages. During the construction of the New Town, the Nor Loch was drained and the area was converted into private gardens for Princes Street residents until the city purchased them and opened them to the public in 1876 with the name Princes Street Gardens.