Stagnant sales could have prompted the Chinachem Group to convert its lily-shaped Repulse Bay residential project into a luxury hotel, property analysts said yesterday. The company announced this week that it had applied to modify its development, at 129 Repulse Bay Road, because high-end hotel projects could be more profitable. The 352-room hotel, designed by architect Sir Norman Foster, would reportedly be positioned as a 'world-famous' hotel modelled after the five-star Burj Al Arab in Dubai. Lehman Brothers property analyst Anthony Wu said Chinachem probably realised the market for the 184-unit project, released for sale at $30,000 per square foot last month, would not emerge in the short-term. 'The [higher-priced] residential market has not picked up to an extent that people would pay the price,' Mr Wu said. 'They might think it was better to convert it into a hotel. At least they could reap some benefits from its operation.' He said the group could have chosen to target the high-end market because the 113,775 sq ft site was bought for $5.5 billion in 1997. However, he was sceptical about the conversion because of the location and huge costs. 'I doubt whether the location is favourable for hotel development,' Mr Wu said. 'I am curious about how they would do it when the structure was already constructed. It's hard to do an estimation of costs, but I would say it has to be substantial.' Simon Lo, director at Colliers International (Hong Kong), said the plan was risky as the market for such a high-end hotel was questionable at the moment.