I have a number of similar sites in the same niche and am thinking of avoiding duplicate content by url forwarding all the domains to one site as a traffic increasing strategy that avoids duplicate content if the sites are all developed.

Is this a good strategy or will Google penalise my domains and the site to which the other domains are url forwarded to ? Th domains are very similar but all have a good search volume.

What is the best strategy in this case ?

According to last recent Google Updates it is not good thing. As Google is now watching each and every activities all doing for SEO. If you are looking good results for your website then you should follow White Hat Techniques, otherwise your website can be penalized by Google.