The Maribyrnong Defence Site will be sold on the open market after the Department of Defence failed to find a suitable buyer by tender.

The federal government last year announced it would sell the contaminated 127-hectare site, scuppering years of negotiations with Development Victoria, the state government’s development arm.

But more than six months later the sale is moving from open tender to a “market sounding” stage, designed to gather development industry feedback ahead of the site’s sale.

Federal Minister for Defence Marise Payne, Minister for Urban Infrastructure and Cities Paul Fletcher and Assistant Minister to the Treasurer Michael Sukkar issued a joint statement on Saturday stating the “unique development opportunity” is large enough to develop up to 6000 new homes – twice the density flagged by Development Victoria.

“Industry advice will also be incorporated into the sale process to enable the successful delivery of housing, community amenity, heritage and environmental objectives,” the statement said.

A fact sheet prepared for the sale stated the site “is heavily contaminated” as a result of its former use as an explosives factory.

A cocktail of chemicals has been found at the site and decontamination – tipped to cost up to $500 million – could take five years.

“The majority of the contaminants across the site comprises of more common contaminants like asbestos, fuel residue and heavy metals,” the fact sheet stated.

The hefty clean-up bill has put a question mark over whether density will be maximised to recoup costs at the expense of adequate community infrastructure.

“Defence is working collaboratively with the Victorian Planning Authority, the Environment
Protection Authority Victoria and the City of Maribyrnong to achieve the best possible urban
renewal outcomes for the site,” according to the joint statement.

The move to put the site on the market comes despite Chinese developer Zhongren last year putting forward a $2.5-billion vision for the land.

Defence is seeking up to a dozen interested parties to participate in market sounding in March and April, then moving into an ‘expressions of interest’ stage.

The Victorian Planning Authority (VPA) announced on Tuesday that it was creating a planning
framework for the site.

“State planning controls will apply to the site from the day the land is transferred by Defence to the new owner.

“The scale of development, including the number of new dwellings, will be determined through the state planning framework.”

VPA said developers will not be able to redevelop this land prior to the framework and the approval of planning permits.