The private consortium, L2 Capital, is headed by long time Gold Coast businessman and Hope Island Resort Golf Club member John Thomas, with the deal to be funded privately by Casuarina Beach developers Don O’Rorke, Mike Dodd and Lachlan Grantley.

Opposite the large waterfront Point Park, and with unobstructed views over a marina to the CBD, prices in River townhouses started at around $1 million, and rose to almost $5 million.

The sale success of the homes signals a turnaround from the performance of the Docklands market between 2001 and 2005, when a chronic oversupply of apartments meant that by the time some projects were finished, they were worth hundreds of thousands less than what investors paid off-the-plan years earlier.

Those who “weathered the storm” however seem to have done well, with the Docklands precinct enjoying strong rental gains and capital value growth in 2006 and 2007, local agents say.

Mr Collins says the underlying strength of Melbourne’s inner-city residential market has helped change consumer sentiment to Docklands.

He also said the “relatively new” concept of townhouse, rather than apartment accommodation options in Docklands, is appealing to a niche market.

Darebin Appropriate Development Association president Terry Scully said locals are outraged by the development which he said was “approved by stealth” last year, in an application the developer JLR Property Group submitted straight to VCAT.

Mr Scully says the council, which had rejected the previous high rise application on several grounds, were “powerless” once former Planning Minister Rob Hulls “bulldozed through” the plans.

There is a growing concern amongst anti-development groups, that the much publicised rental and housing shortage may be used by VCAT, and the Government, to justify the approval of medium and high density developments in the suburbs.