They said the area was a popular hangout for youths in the area and thought the police were making a peaceful drug arrest.

“Sometimes the young people in there get a bit rowdy. But they’ve always been harmless,” he said.

Ms Neus said police remained in Pioneer Reserve for more than an hour and a half questioning a man and a woman. She said the scene appeared calm.

Another Greensborough local, who did not want to be identified, said she saw more than 20 police officers, some of them plain-clothes detectives, talking to a group of people in an undercover barbecue area at the park on the corner of Main Street and St Helena Road.

"We drove past about midday and there was a massive police presence at the park, detectives, crime scene investigators ... I thought, 'what's going on there'," she said.

"The police were in the entrance to the park and in the undercover barbecue area, with detectives walking up and down ... there was a younger girl [who looked] about 20 they were talking to."

Other neighbours who live near the park also say they saw police talking to the group for more than an hour.

It is understood the young man was identified as a key person of interest after forensic tests were conducted on clothing dumped not far from the scene.

The man was arrested less than 10 kilometres from the area Ms Maasarwe was killed.

"The 20-year-old was arrested in Greensborough by local police working in partnership with homicide detectives about 11.20am," police said in a statement.

"The arrest [comes after] an extensive investigation into Aiia’s death following the discovery of her body near Main Drive and Plenty Road in Bundoora on Wednesday, January 16, about 7am.

"Police would like to thank the public for their assistance with the investigation."

The alleged killer has been described by police as an "opportunistic" attacker, whose random crime was "absolutely horrific".

It is believed he may have been left bloodied after the attack and also took several items from Ms Maasarwe's handbag.

A distinctive black cap with the number "1986" and a two-tone grey Cotton On T-shirt, which police strongly suspect were dumped by the alleged killer after the attack, have been crucial to the investigation.

The cap and T-shirt were found by police less than 100 metres from Ms Maasarwe's body.

"Someone in the community knows about this. Someone has gone home on Tuesday night, or in the early hours of Wednesday morning, maybe with blood on them, missing items of clothing. Somebody knows about this," homicide squad Detective Inspector Andrew Stamper said on Thursday.

He would not say whether a weapon had been used in the murder, or detail the injuries to Ms Maasarwe's body out of respect for her family.

The scene has been described by police sources as being "horrendous as you could get".

Ms Maasarwe was on her way home from a gig at The Comics Lounge in North Melbourne and was speaking to her sister on the phone via FaceTime when she was attacked.

On Tuesday night, she was with new friends at Flagstaff Gardens in the CBD to practise her English, before going to a gig at The Comics Lounge in North Melbourne.

Ms Maasarwe was driven by friends from the comedy club to the CBD, where she caught the Route 86 tram from Bourke Street about 10.50pm.

Detectives have released CCTV images of the young student leaving the comedy club late in the evening.

She got off the tram at the Plenty Road stop near Main Drive, Bundoora, about 12.10am.

It is the tram stop closest to her student accommodation near La Trobe University in Bundoora, in Melbourne's north.

Ms Maasarwe was found unresponsive by window washers in a grass area outside Polaris shopping centre, 100 metres from the tram stop, on Main Drive, about 7am on Wednesday.

Inspector Stamper said she was only about 1 kilometre from her home when she was attacked. He said "every available resource" was being poured into the investigation.