It was London’s first real boutique hotel. After opening its doors in the early 1990s, the Halcyon hotel, in Holland Park, west London, swiftly established itself as one of the capital’s most exclusive – and most discreet – celebrity bolt holes. Regarded as one of the city’s best-kept secrets, the 44-room hotel played host to an extraordinary amount of celebrity shenani-gans in its short history.

A private detective hired by Jerry Hall to spy on Mick Jagger allegedly found the singer staying there, under a false name, with a mystery woman. Paula Yates was at the Halcyon with Michael Hutchence the day her separation from Bob Geldof was announced, and Liam Gallagher hid there after his split from Patsy Kensit – who had spent her wedding night with her first husband, the Simple Minds singer Jim Kerr, at the hotel.

Liza Minnelli, Geri Halliwell and Monica Lewinsky all lived in the hotel for a period of time. (Halliwell apparently demanded an exercise bike for her suite, which she mainly used to hang her clothes over.) The Halcyon was also the interview location of choice for celebrities such as Robert de Niro, John Cleese, Naomi Campbell and Yoko Ono. Oasis used one of the bedrooms for the photo shoot for the cover of their 1994 single Cigarettes and Alcohol. Much less glamorously, it was at breakfast in the hotel that Andrew Marr, the struggling editor of The Independent, was offered a job by Greg Dyke, then BBC director-general.

“There were quite a lot of Alist celebrities who came to stay,” admits Will Oakley, general manager of the Halcyon for three years. “They could use it as a bolt hole away from prying eyes. We offered a discreet service – it was five-star without the marble and chintz of the Dorchester or the Savoy.”

Now the Halcyon’s days as a celebrity hideaway are over, and a new era is about to begin. Five years ago, the hotel, tired and in need of refurbishment, closed its doors for good. Despite a charge of £725 a night for a suite, the numbers didn’t add up, and the developers moved in. The two mid-19th-century, Grade II-listed townhouses that formed the hotel are being turned into 12 luxury flats, with prices starting at £2.15m for a 1,300 sq ft two-bedroom property. They will be ready for occupation in September.

From the outside, the buildings look much the same as their neighbours: white stucco frontage, elegant proportions and an air of dignity that even piles of building materials can’t conceal. Inside, however, the rambling layout that once confused the astronaut Buzz Aldrin – he claimed he kept getting lost whenever he stayed there – has been reorganised into a group of size-able flats over four floors by Tusk Developments, the firm that became involved with the project in 2005.

“When we came on board, there was already planning to turn the building into 14 apartments,” explains Martin Hodgson, the director of Tusk, “but it was a very poor configuration. We redesigned it to create much bigger apartments, with fewer bedrooms and fewer corridors.”

The transformation has been fairly brutal. Gone is the intimate Room restaurant – which was such a disappointment to Michael Winner, the Sunday Times columnist, that he recommended the chef, restaurant manager and waiting staff all be fired. Gone, too, are the Egyptian Room, with its bedouin tent canopy, and the old-fashioned marble bathrooms.

In their place is eclectic global chic, the interior-design version of world music. The completed ground-floor and basement show flat, which gives a taste of what is to come, is bedecked with treasures from around the world.

“The aim was to use a lot of textures and a lot of materials, and make it look as though the end user was well travelled, even if he wasn’t,” explains Ludmilla Paratian, head of interior design at Tusk. It is a mantra that has clearly been taken to heart. The entrance hall is floored with bamboo verde and has a huge aquarium filled with tropical fish set into its wall.

The hall leads to a kitchen where the walls are partially tiled with semiprecious stone from the Philippines. Beyond, in the centre of the sitting-cum-dining area, an enormous wooden Thai horse competes for attention with an original Chinese fisherman’s outfit encased in Perspex on the wall, and ornate Italian rugs are scattered around on the floor.

Downstairs, in the master bedroom, the headboards hail from Italy and the side tables from Spain, while in the guest bedroom, one wall is dominated by a beautiful silk kimono that hangs as artwork. At times, the flat almost feels like a museum, with objets d’artfrom all over the world.

This grown-up “gap year” feel is countered by the technology that is installed as standard. The bathrooms are straight out of Ocean’s Thirteen, with glass-sided baths studded with water jets (exclusive to Tusk), 32in screens concealed in the wall at the foot of each bath for a home-cinema wallow, black lavatories, red glass basins, Swarovski crystal uplighters and even black loo roll.

The guest lavatory has an “infinity ceiling”, the bedrooms have pro-grammable mood lighting and there is, of course, enough security to keep an army at bay, with remote access for alarm systems, entry, lighting, heating and audiovisual equipment.

“Our aim was to create dramatic space that is also liveable,” says Hodgson. But, he adds, “our products are not built for just anybody”.

The kind of client he says he is hoping for is a wealthy trader or overseas businessman – not unlike the investor who has bought five of the flats for a total of £14.5m. Such buyers, who have hitherto confined their attentions to Knightsbridge and Belgravia, are beginning to look at Holland Park, says Oliver Gibson, who is working on the project for the agent WA Ellis, which, together with Knight Frank, is selling the flats.

“Value-wise, we are chasing records,” Gibson says. “Aiming for £2,000 per square foot on the first and second levels of the development illustrates the impact of the market uplift in Knightsbridge that is creeping further afield. On an admittedly busy section of Holland Park, it does seem a lot of money – but when you compare it to what’s going on centrally, it’s not.”

Gibson reckons it is not going to be a one-off, either, which means Holland Park could soon recover some of the glamour of the Halcyon days.

Knight Frank; 020 7823 5906, www.knightfrank.com. WA Ellis; 020 7306 1652, www.waellis.co.uk

Times recommends

• Fall in house sales hits builders, estate agents and mortgage brokers
• Why the property credit crunch favours cash buyers
• The blood-curdling history of Quarrelwood House