A Newhaven property developed in 1928 as the St Paul’s Boys Home is being sold by The Knox School.
The 1.4 hectare waterfront block comes with permission for an apartment and townhouse project which would incorporate heritage building.
The vendor could be set for a $4 million payday according to sources, Fitzroys selling agent Peter Weatherby declined to comment.
Knox School acquired the property in 2004 with plans to repurpose it as a specialist campus and getaway for its Wantirna South students.
It blamed higher-than-expected maintenance costs as its reason for not going ahead.
Newhaven is on Phillip Island, a two hour drive south east of Melbourne.
The proposed residential development was rejected by Bass Coast council but approved by the Victorian Civil and Administrative Tribunal.
Meanwhile another private school, Wesley College, is obtaining a permit for a multi-level complex with 84 apartments for part of its Glen Waverley campus.