Infamous Sydney Irish pub Scruffy Murphy's in the southern part of the CBD could soon make way for a brand new 40-storey hotel and residential tower with new retail shops.

The new owner of the sites at 698-704 George Street and home of Scruffy Murphy's at 43-49 Goulburn Street in Haymarket, KGH Co Pty Ltd, has lodged a stage one development application with the City of Sydney to redevelop the prominent corner near Chinatown.

This includes the adaptive reuse of the heritage Kiss's Building or Haymarket House at 698-704 George Street.

KGH Co Pty Ltd has lodged a stage one development application to redevelop the prominent corner featuring Scruffy Murphy's. Domino Postiglione

The application considers a partial retention of the Scruffy Murphy's building but the proposal is to demolish that building and the adjoining property at 51-57 Goulburn Street.

The combined 1225sq m site could likely yield a tower that will house a 240-room hotel and apartments on the upper floors. The lower floors of the building will be used for amenities and retail shops. The application also seeks four levels of basement parking and storage area.