About 200 Melville residents opposed State Government plans to redevelop the former Heathcote hospital site in Applecross for residential use.

Residents packed a public meeting convened by Applecross ward councillors Mike Board, Shirley de Burgh and David Barton, voting unanimously against the proposal.

The State Government had approached Melville council seeking help purchasing the site, but council rejected the offer after a preliminary assessment estimated the property was worth between $30 million and $40 million.

Applecross MLA Richard Lewis said council had promised to protect the land from development and retain it for recreational or public open space. He argued the site's heritage value was also important because of its association with European and Aboriginal history.

Councillor Alison Harris said the retention of the hospital buildings was historically significant, while the surrounding land was an important part of the State's heritage. Residents argued the Government should consult the original inhabitants of the land before making decisions about its future.

National Heritage Trust spokesman Peter Hocking said the State Government had made decisions concerning the land's future without sufficient public involvement. Asset Management Taskforce representative Gary Muller said the Government had an obligation to responsibly manage State assets and that no final decision had yet been made.

Residents suggested alternatives including retaining the site as public open space, establishing a central arts centre in the former hospital buildings, and preserving the grounds as a bushland area comparable with Kings Park. One resident who had lived nearby for more than 30 years said the site's foreshore had changed dramatically and argued it should be retained rather than sold for development.

The meeting formed part of the public debate over the future of the former Heathcote hospital site, which eventually became the Heathcote cultural and community precinct.