But less than a year later, the block is estimated to be worth more than $100 million. It is largely because the council has proposed to remove its discretionary 20-metre height restrictions, opening the door to tower developments.

The strategy has been praised as "very smart" by real estate experts, including the agent who sold the block on the corner of Queen and Therry streets.

The council will likely sell off at least some of the 6329-square metre site, or its airspace, to a developer at the higher price.

They will also maintain ultimate control of what is built on the land, which is largest remaining freehold development site in the central city.

This week the council began seeking expressions of interest for a "private sector partner" to build a "mixed-use" precinct of apartments, shops, cafes and hospitality services, such as a cooking school.

Melbourne lord mayor Robert Doyle said while he was open to innovative ideas, he would prefer one taller tower on the block, as opposed to a precinct of three or four high-rises.

"We are not looking to max out the site by any means," he said.

Mr Doyle said the site's premier location – at the doorstep of the market and the heart of Melbourne – would mean the apartments within the tower could be "high end" and "high quality".

However the successful applicant would also have to provide up to 15 per cent affordable apartments.

And there are other caveats.

A 720-space multistorey car park needs to be included in the project, to replace the current market facility which is being ripped up to create a park or piazza.

Council is also asking for a childcare centre, family hub and laneway connecting Franklin Street to Therry Street.

There is expected to be substantial competition to develop the block from overseas and local companies.

Savills' director of city sales and investments, Clinton Baxter, sold the vast landholding of warehouses and shops last year on behalf of the Munro family, who owned the block for more than a century.

He said even before the sale, the Munros had received multiple bids that exceeded the council's $76 million offer, but chose to return the site to the city.

Mr Baxter said council could now expect to fetch upwards of $100 million in a resale. But that figure would decrease as more demands were placed on the developer to hand back land or build facilities for council, he said.

The proposed removal of current height limits at the site has been submitted to Minister for Planning Richard Wynne.

Colliers International's director of city sales Matt Stagg confirmed the zoning change would substantially increase the value of the land.

He said the location was highly desirable area for apartments and a hotel, while the land purchase would allow council to maintain even greater control over the redevelopment of the market precinct.

"It is an amazing move – for a council or government entity to be that entrepreneurial or forward thinking," Mr Stagg said.

Expressions of interest for the site close in September, with applicants to be shortlisted by October.

The praise for the council's real estate investment contrasts with criticism of the Victorian government's failure to buy up cheap land in Fishermans Bend for community infrastructure and facilities before rezoning the precinct for redevelopment.