Reporter The first part of the new Castle Harbour hotel has been given the green light after developers secured $50 million of funding.

Bermuda Properties Limited was due to sign an agreement with local and overseas investors yesterday that would signal the start of the five star resort, residential and golf site.

Local company Argus Insurance is a substantial partner in the project, which is now expected to start construction in the New Year.

Tourism Minister David Allen announced the move in the House of Assembly yesterday, saying the first chunk of cash would allow the golf course to be completed, the designs for the new hotel to be completed and building work to be initiated.

"It is expected that this magnificent resort will be open for business in 2003,'' he said. "The development represents the most significant development in our hotel industry in nearly 30 years.'' If planning approval is given, demolition will begin early next year of the old hotel structure.

However, the plans are expected to incorporate some of the existing building into the new design.

Peter Parker of Bermuda Properties said the design work would eventually determine how much of the structure would remain in place, and form the base for the new Rosewood Hotel.

The golf course has been extended from 5,800 yards to 6,300 yards, and become more challenging in the process.

Mr. Parker said some aspects of the project, the residential sectors, would be self financing.

He said he expected the next slice of funding to be in place within three months.

He added that there were many applications for planning permissions to go before the Development Applications Board in the coming months.

Mr. Allen said the development would stand alongside other renovations going on, with the result of a hugely upgraded Bermuda hotel experience.

He commended existing hotels for their investments, in particular the smaller properties which had worked hard to improve their properties.

"At the end of this period of frenetic activity, Bermuda will be well-positioned to reclaim its crown as the leading high-end resort island destination in the western hemisphere,'' he said.

Texas-based hotel company Rosewood are expected to manage the property and will themselves pump in a substantial amount of money.

The hotel will have around 200 suites and a residential aspect that can be leased back to the hotel as tourist accommodation.

The idea is to give tourists, particularly families, a wider range of accommodation options than the traditional hotel room.

It was originally thought that the original hotel property could be renovated but after engineers entered the building, following its December 1999 closure, they discovered its poor state and old fashioned design would not permit that.

David Allen