Property investor New Asia Realty and Trust Co's Singapore-listed subsidiary, Marco Polo Developments (MPD), is searching for a hotel site to substitute a hotel redevelopment project that the group expects will realise at least S$750 million (about HK$3.83 billion). MPD managing director David Lawrence said the company was reviewing a smaller hotel project of 300 to 400 rooms. 'Hotels are good sources of recurring income. We are looking for a prime hotel location, perhaps it does not need to be as big as [the existing] one,' he said. The 29-year-old Marco Polo Hotel in Singapore, MPD's sole hotel managed by the Wharf group's wholly owned Marco Polo Hotels, had 603 rooms, which was relatively big compared to the other modern hotels, Mr Lawrence said. He said the site would be redeveloped into condominiums, to be called Grange Residences, while the expected contribution from the existing hotel was expected to be reduced significantly over the next few years since it was losing its competitive edge to modern hotels. 'It is our view that the outlook of the hotel's operation is not expected to improve in the near to medium term,' he said. The average turnover of the hotel for the past three years was $45 million. For the year ended March, the hotel generated about 30 per cent of MPD's pre-tax profits. MPD plans to develop the site into two towers of 150 units, with eight penthouses. Mr Lawrence said the redevelopment cost would be derived from the pre-sale of the condominiums to be launched in the first half of next year. Demolition of the existing hotel is expected in early 1999 when the management contract expires. He said the $2.95 million compensation to Wharf on the termination of the hotel management contract would also be included in the construction cost. He declined to reveal the profit that MPD could reap but said that would be a 'substantial' revenue earner for the coming years.