Private developer Deal Corporation is forging ahead with the transformation of a former mental asylum into a housing haven, launching the second stage of its 12-step project.
Work is set to begin on 68 townhouses and three buildings with 72 apartments at the former Larundel Mental Asylum in Plenty Road, Bundoora, Dealcorp managing director David Kobritz said.
The first stage of Dealcorp's 10-year $500million project was completed in April.
It included a town centre anchored by a Woolworths supermarket and Dan Murphy's liquor outlet with 26 retail shops on the ground level of a 64-unit apartment building.
Larundel, renamed Polaris 3083 by Dealcorp, is on a 12-hectare site opposite Bundoora Park.
Another proposed five-storey 378-unit development on Plenty Road recently gained planning approval to replace the derelict Smorgy's restaurant. Both developments are adjacent to La Trobe University's main Melbourne campus, which hosts up to 19,000 students.
"The advantage is we're next to a university but it will be conventional inner-city apartments and townhouses," Mr Kobritz said.
The Polaris site contains eight dilapidated red-brick buildings from the former hospital, half of which the masterplan shows will be converted for residential use.
The buildings had been empty for years and were badly vandalised.
Stage three of the project was likely to include some heritage conversions, Mr Kobritz said.
Dealcorp has retained ownership of the commercial real estate to ensure the mix of tenants is correctly managed.
"Until the residential is completed and further shops developed, we'll most likely hold on to it for the forseeable future," he said.
The project overall will house up to 700 apartments and townhouses in buildings rising between two and six levels.
A council-built community centre in one converted former hospital building will open at the end of this year.