Completion of the five-star hotel is key to Rarotonga's fast-growing tourism industry.

A derelict Rarotonga resort - once linked to the Italian mafia and believed to be cursed - is up for sale.

Auckland-based Mirage Group put the abandoned beachfront property on the market this week.

The resort on the southern side of the island is well-known as the former site of a planned Sheraton Hotel.

SUPPLIED The current owner has already won approval for changes to the island's ring road, which currently separates the buildings from the stunning beach.

The land is now home to a number of cows and horses who graze the poorly maintained grounds.

Graffiti covers the walls inside and out while torn wiring dangles from the ceiling.

The locals tell the story of a developer who had ties to the Italian mafia. They say he just up and left, and as soon as he did, the locals came in and took any furniture and fittings they could.

Graffiti covers the walls - inside and out - while torn wiring dangles from the ceiling.

All that remains are dirty, moss-ridden spa baths, and smashed hand-basins and toilets.

In November 2014, Mirage Group lodged an Environmental Impact Assessment with a Cook Islands Government agency seeking approval to turn the hotel site into a five-star resort.

As of this week, the application has been placed on hold at the request of the applicants - pending resolution of their issues.

All that remains are dirty, moss-ridden spa baths, and smashed hand-basins and toilets.

However, Bayleys, which is marketing the property, said the owner has already won approval for changes to the island's ring road, which currently separates the buildings from the stunning beach.

Approval has been given to re-route the road so that guests have unimpeded views and access to the 330 metre beachfront.

Bayleys said the current owner had completed plans for a luxury resort featuring stylish hotel rooms, over water bures and a lush tropical garden.

The entire project was about 90 per cent complete when work stopped in the early 1990s.

Completion of the new hotel remains a top priority for Rarotonga's fast-growing tourism industry.

When complete, the property will be Rarotonga's first five-star resort with potential to accommodate up to 460 rooms, villas and apartments.

Bayleys expects strong interest from New Zealand, Fiji, the United States, and throughout Asia.

The new developer or investor would be free to make adjustments, or propose a completely new resort, as long as it remains a five-star product.

Bayleys salesman Philip Toogood said the current owner was shifting focus to new ventures closer to home in New Zealand.

The property had huge development potential, he said.

"This is a unique offer ... it is unlikely there will be a second resort of this calibre and star rating in Rarotonga for a very long time, if ever.

"From the discussions I have already had with various government and local authorities in Rarotonga, it is clear there will be enormous support for the new developer [or] investor," Toogood said.

"The timing is right, and the market is ready. This will be very good for Rarotonga and very good for the South Pacific."

NZME has reported the history of the hotel, which dates from a 1987 deal when the Cook Islands government signed a $52 million contract with an Italian bank.

Even the sod-busting ceremony ushering in what guests hoped would be a shiny new era for the small Pacific nation was upstaged when an angry resident claiming to be the true resort landowner gatecrashed proceedings.

More Rua arrived dressed in warlike regalia and invoked a curse before thrusting a spear into a rock bearing a project plaque.

Another Italian company later stepped in but failed to finish the 200-room job when Rome pulled funding amid allegations of mafia-related corruption.

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