If you are using IntelliJIdea try using: (Tested on IntelliJIDea 11 and 12 with grails 2.2.2)
EDIT: Jar version case also included for different grails versions.
grails -Dserver.port=8096 -javaagent:${GRAILS_HOME}/lib/org.springsource.springloaded/springloaded-core/jars/springloaded-core-1.1.x.jar -Xverify:none run-app
NOTE: where 1.1.x is the version of jar in case of grails 2.2.2 it is 1.1.1 and in case of 2.2.4 it is 1.1.3
But, if you are using command line try using
grails -reloading run-app
without any "-D" system property reloading should work fine. (Not tested though) Reference: http://jira.grails.org/browse/GRAILS-8951?page=com.atlassian.jira.plugin.system.issuetabpanels:all-tabpanel