Brothel in industrial area in Seaford sells for over $1.5m

A two-storey brothel in an industrial area in Seaford sold for over $1.5 million and will be retained as an adult entertainment venue.

Agent George Kelepouris from Ray White Commercial Oakleigh who sold the property in July said the online auction attracted six registered bidders and was sold to an investor who plans to continue leasing the property out as a brothel.

The 1044sqm site on the Mornington Peninsula is tenanted to Paradise Angels on a 10-year lease which began in 2018, with two further options of ten year leases and the substantial freehold site currently earns $108,000 a year in rental returns.

The property sold for $1,560,000 on a yield of 6.9% which Mr Kelepouris described as “an extraordinary yield, that’s why there was so much interest”.

Paradise Angels have leased the industrial site since 2018. Picture: realcommercial.com.au/sold

The size of the property and the brothel’s zoning as industrial 1 were also important considerations for the buyers Mr Kelepouris said as the industrial sector “is going from strength to strength” right now.

“So the industrial 1 zoning in its own right is holding quite strong,” he said.

The new owner is an investor who owns other properties and is upbeat about the industrial site’s long-term future Mr Kelepouris said.

“However the new owner has suggested that to get the plans and permits now on a similar [brothel] site might take quite a while. So he seems to understand the asset class,” he said.

The sale comes amid a time of change for brothels, some have struggled with the trading restrictions enacted during the lockdowns in the first two years of the pandemic.

There have been several brothels listed for sale this year.

A brothel in Cairns that opened in 2006 sold to Autism Queensland in April and a brothel in Townsville in May was listed as under contract to sell to a fire protection business who wish to use it as a warehouse and office.

In February in Victoria, the Sex Work Decriminalisation Act 2022 was passed by parliament as part of a staged decriminalisation of sex work.

Under the changes that will come into effect in December 2023, the brothel and escort agency provisions of Victoria’s Public Health and Wellbeing Act 2008 will be repealed and the sex work service provider licensing system, which operates under the Sex Work Act 1994 will also be abolished. Brothels will now be allowed to apply for liquor licenses and if approved will be subject to the responsible service of alcohol provisions. Changes will also be made to planning controls to treat sex service businesses like other businesses.

The exterior of the brothel at 61 Trade Place, Coburg North. Picture: realcommercial.com.au/for-sale

Rahul Malik, director of 7Real Estate, who is currently selling a brothel in Coburg North says the changes will have an impact on licenced venues.

He said individual sex workers will be legally entitled to operate from a private home or rental property subject to approval from landlords and planning approvals from local councils depending on the number of workers operating from one location.

He says under the changes set to be introduced next December, there may come a time in Victoria when “there is no need for someone to go to a brothel”.

But Mr Malik also said many potential buyers interested in the 2280sqm Crystal Lodge building in Coburg North actually want to use it for more traditional industrial enterprises such as manufacturing or or an engineering business or even an education facility.

For these potential buyers, the property’s past as a brothel isn’t ideal but “…at the end of the day it’s fully equipped to run any sort of business,” he said.