Property company Leighton will transform the former Moonee Ponds market into a $450 million planned community after buying the site for $23 million.
Leighton Properties and its joint venture partner, private equity real estate firm Qualitas, finalised the deal Tuesday, buying the 1.34 hectare block from US-based owner Reading Cinemas.
The former market, now used as a car park and criticised by locals as an eyesore, has for the past 16 years been mooted as a development opportunity, but despite numerous proposals Reading was unable to turn a sod on the site.
Opposite the Moonee Ponds train station, the site had the potential to house more than 800 apartments and provide 2000 square metres of ancillary retail space, Leighton managing director Mark Gray said.
"The future development of this unique site with six street frontages in the heart of Moonee Ponds' established and thriving town centre will be the first master-planned development in the area and is set to become a landmark precinct," he said.
When it first bought the prime site near the Puckle Street retail strip, Reading had plans for a major entertainment complex.
That was replaced with other concepts before Reading put the property on the market in May with unapproved plans that included three apartment towers, the tallest of 26 levels, in a $250 million mixed-used development.
Leighton's proposal includes a mix of low and high-rise residential buildings initially of between six and eight levels, but Leighton's national head of residential, Gavin Tonnet, would not be drawn on the maximum heights.
He said Leighton hoped to lodge development plans in 2014 and begin building the following year.
"It's fairly early days. We would expect to prepare and lodge planning applications in the latter half of next year," he said.
Moonee Valley Council's preferred height is 16 storeys.
There is expected to be a rapid increase in high density housing after Moonee Valley Racing Club submitted revised plans for a development that includes 2500 apartments on six of the racetrack's 40 hectares.
A government-appointed advisory committee will decide how much housing the racetrack will hold, but the council is strongly opposed to its overdevelopment.
Moonee Ponds fits Leighton's strategy to target inner-ring urban renewal sites close to transport, shops and employment, Mr Gray said. "We expect a strong underlying demand from locals," he said.
Colliers International's Jeremy Gruzewski and Peter Bremner, and CBRE's Justin Clarkson, Scott Orchard and Ari Petrovs were the agents behind the deal.