Last year North Tyneside Council invited offers for the site of the former Whisky Bends pub on the Promenade.
Compass Developments Ltd has exchanged contracts to buy the site and intends to build three four-bedroom townhouses, each with two parking spaces.
A planning application will be submitted soon and, subject to planning consent, the homes could be released for sale by summer 2019.
Graham Anderson, chairman of Compass Developments Ltd, said: “Whitley Bay is a really up and coming area so we were delighted to be chosen as the developer for this great location.
“There is a need for a luxury, high-end development overlooking the seafront - these will be upmarket properties that provide fantastic views.
“The townhouses will be in keeping with the local area and contribute to Whitley Bay’s continued regeneration.”
North Tyneside’s Elected Mayor Norma Redfearn CBE said: “I’m delighted that a high-quality housing scheme is being brought forward for this prominent site.
“Compass Developments has delivered some excellent housing schemes in the borough so it’s great news that they will be contributing to the transformation of Whitley Bay.”
Compass Developments is currently involved in the multi-million pound project to turn empty properties in Northumberland Square, North Shields, into high-quality townhouses and apartments.
Other projects have included constructing new townhouses on the site of the former Camperdown Social Club and bungalows at Wallington Court, Cullercoats.
The sale of the site was handled by Strategic Property, a service provided for the council by its partner Capita.