Supermarket giant Woolworths has snapped up a sought-after development site in the inner-city Perth suburb of Subiaco, splashing out $12.4 million for the former Princess Margaret Hospital car park.

The former specialist car park was billed as Perth’s largest infill development site. The larger 35,000sq m Princess Margaret Hospital site is estimated to be worth more than $100 million.

Replaced by the new Perth Children’s Hospital, the hospital closed its doors in mid-2018, while the government development arm Landcorp has published the masterplan of Subi East for public consultation.

The government will preserve heritage buildings at the site. The redevelopment area includes Subiaco Oval, Princess Margaret Hospital and West Leederville train station.

High-density zoning is set to increase housing in the area by around 6,000 by 2050.

Land minister Ben Wyatt announced the sale of the 5,666sq m car park site to Woolworths’ subsidiary Fabcot Pty Ltd on Wednesday.

“[Woolworths] has put forward a proposal that aligns with our broader vision to reinvigorate the area and complement the neighbouring Subi East development,” Wyatt said.

The sale represents a rate of $2,135 a square metre. Future development of the site, which sits between West Perth and Subiaco, is zoned for both commercial and residential development.

Meanwhile, Perth developer Blackburne’s plans for three towers at the Subiaco Pavilion Markets was approved earlier this year.

The $235 million proposal includes the redevelopment of the markets, which the developer says will provide a catalyst for much-needed economic development in the area.

Moderating vacancy rates — down around 14 per cent for West Perth from 15.6 per cent in June 2018 — and stabilising rents has driven demand in Perth’s fringe office market.

Take up of office space in Subiaco has increased as the area welcomes a surge in development, according to Knight Frank.

LJ Hooker Commercial agents Brian Neo and Vincent Siciliano managed the marketing campaign on behalf of the state government.

“Being on the edge of the Subi East redevelopment area, the government was naturally looking for a purchaser that was able to deliver consistent amenity [and] integrate the site with the rest of the precinct,” Neo said.