A former military parade square in Sentosa will be turned into a hotel by Far East Organization, adding to the island's cluster of repurposed conservation buildings.

The developer said on Wednesday that it trumped three other submissions to win the tender for the 60-year leasehold hotel site at Artillery Avenue from the Sentosa Development Corporation.

The site is on elevated ground and overlooks the Palawan Beach and the sea off the southern end of Sentosa.

It includes six blocks of barracks and a coach park. The military parade square and the barracks have been gazetted for conservation.

Far East will pay $32 million upfront for the land parcel, which is around 484,400 sq ft and has a permissible gross floor area of up to 387,500 sq ft.

On top of that, it will pay a guaranteed sum every year to Sentosa Development Corporation, which is either 10 per cent of the hotel's total gross revenue that year or a fixed sum, whichever is higher. The fixed sum starts at $3.7 million and will be raised by 3 per cent every year.

Mr Chng Kiong Huat, executive director of property services at Far East Organization, said in a statement that the hotel would be named The Outpost and will integrate two hotels with a combined 700 rooms.

"We will also offer a specially tailored hotel for families and corporate MICE groups under a branding that will best fit this unique site." The term 'MICE' stands for meetings, incentive travel, conferences and exhibitions.

The hotel is expected to be completed in 2018.

Far East said that it intends to offer the hotel as a "major pipeline project" for the Far East Hospitality Trust, whch it sponsors. The trust holds 12 properties in the hospitality segment.

Other hotels on Sentosa Island include Mövenpick Heritage Hotel Sentosa, Amara Sanctuary Resort Sentosa and Capella Singapore.