Part of old Red Hill's garden precinct, the 5500-square-metre property has no heritage restriction on demolition under its precinct guidelines. The ACT Planning Authority approved the redevelopment following consultation with the ACT Heritage Council.

"It is the most beautiful block in the world," the property's owner, a Canberra businessman, said. "It is the reason we are staying in Canberra, the [new] home has been designed for a young, growing family. We are showing confidence in Canberra, I had originally planned to return to Sydney, but my wife found this property."

Surry Hills architect Phillip Mathieson, who lodged a development application in 2013, said the initial intention was to keep a significant part of the original building. "In the process, and with engineering advice, it was considered structurally that it needed to be demolished," Mr Mathieson said.

Over the next 12 to 18 months a new, two-storey residence and under-cover pool will be built behind the original hedge which has Arthur Circle and Moresby Street frontages. "The garden had not been well maintained, a significant number of trees will be retained and a substantial garden will be reinstated, including two new ponds, larger than the original pond," Mr Mathieson said.

Upstairs will include a main bedroom with terrace and five other bedrooms. The brick-veneer home under a parapet roof won't be visible from the street.

Architects Moir and Sutherland's original design in 1937 for A. Tregear underwent alterations and additions in 1987-1988 and again in 2001. The Tregear family sold to Dr Leo Shanahan, who owned it for many years before selling to gemstone exporter John Bozic, a keen gardener who in 2002 successfully applied for a bore licence.

Putting the home,14-metre saltwater pool and tennis court on the market in 2007, Mr Bozic, originally from Slovenia, said the garden overflowed with daffodils, weeping trees, camellias and jonquils. "The ducks nest by the pond and raise their chicks here," he said.

The house was rented to the Kuwaiti ambassador when Mr Bozic was in Japan and Sydney. Parties of up to 80 people would gather on the ground floor which had three living areas and a formal dining room. Up to 20 cars could park on the terracotta driveway. At other times the home was leased to a Deloitte's senior executive, and for a time to the Danish embassy.

A grand entry hall led to large formal and casual living spaces. A large study/library had a separate entrance. Six large bedrooms had balconies, and there were four bathrooms and two powder rooms.

Correction: An earlier story incorrectly referred to 61 Arhur Circle's architect as Malcolm Thorn.