Developers bidding to demolish a beloved former hospital and replace it with an extravagant eight-bedroom family mansion claim the new house would be “worthy” of Hampstead Heath.

Athlone House Limited made the case for knocking down Victorian mansion Athlone House off Hampstead Lane in Highgate at the start of a public planning inquiry on Tuesday.

Campaigners showed the strength of feeling behind the fight to save the former RAF intelligence base on the edge of the Heath from demolition by turning up in droves at the hearing in Euston.

Developers want to replace Athlone House with an extravagant family home including a basement car park and swimming pool.

The plans have been likened to an “Arabian nightmare” by conservationists.

Barrister Robin Purchas QC, on behalf of Athlone House Limited, said in an opening statement: “[It] would be a building of outstanding architectural quality and worthy of its situation.”

Mr Purchas told the hearing that the proposals would not adversely affect views from Hampstead Heath.

He added that the benefits of building a new home “readily outweigh” the value of keeping Athlone House.

The inquiry heard that the proposed mansion would be “a family home” for the house’s mysterious owner, thought to be a foreign billionaire.

Applause sounded in the inquiry room as barrister David Altaras objected to the proposals on behalf of the Athlone House Working Group (AHWG) campaigners, made up of members of the Highgate Society, Heath&Hampstead Society and Highgate Conservation Area Advisory Committee.

He told the inquiry that the scheme architect’s description of Athlone House as an “ostentatious display of wealth” more accurately describes the controversial development plans.

In his opening statement, he added: “I am confident that everyone at this inquiry understands the fundamental aim of AHWG but for the avoidance of doubt I shall spell it out.

“We wish to retain this elegant mid-Victorian mansion.”

Barristers on behalf of Camden Council and the City of London Corporation, which manages Hampstead Heath, urged planning inspector Colin Ball to reject the appeal in opening statements on Tuesday.

It is estimated that the developers spent in the region of £1million on appealing to the Planning Inspectorate to push proposals through after Camden Council failed to rule on the plans in time last year.

The local authority later refused the proposals at a planning committee last summer.

Council conservation officer Hannah Walker told the inquiry that the “classical style” and “symmetry” of the proposed mansion would emphasise the size of the building.

She added: “Many of its features give a palatial impression, which would impact on openness.”

The inquiry is due to run for 12 days over three weeks at The Wesley Hotel in Euston Street.

Today (Thursday), expert witnesses including Professor Joseph Rykwert, an award-winning architectural historian, and conservation engineer Jon Avent, will make the case for why Athlone House should be restored and not demolished.