The first phase of a major redevelopment on the site of the Cremorne silos has been green-lit after VCAT overturned a rejection by City of Yarra.

Over three stages, developer Caydon Property Group plans to transform the 1.4-hectre site of the old malting silos into a precinct called The Malt District.

The development plans include close to 850 apartments, a micro brewery, retail spaces, restaurants, gardens and a rooftop bar with 360-degree views of the city.

Caydon intends to restore the iconic Nylex Clock and turn it back on in the process, but its plan to demolish the defunct 1960s-era silos had been criticised by the council and heritage groups.

The City of Yarra rejected permits for stages one and two of the project, but VCAT overturned the decision for stage one on certain conditions, which include Caydon reducing the number of parking spaces.

Caydon is now waiting for the outcome of its appeal against Heritage Victoria’s action to block its plans to demolish buildings on the site.

Former Victorian premier Jeff Kennett has been vocal in his criticism of the development, calling it an “overdeveloped, under-designed monster”.

“I don’t mind reasonable development, and I am in favour of developing the site, but what’s proposed is totally inappropriate given its size,” Kennett told the Australian Financial Review in January.

A report from Heritage Victoria outlines the historical significance of the Nylex Clock and silos, labelling them “a significant cultural iconic feature in the Melbourne landscape and psyche and [they] even feature in the song Leaps and Bounds by musician Paul Kelly”.