Owning a slice of notorious Frankston hotel comes with small catch

If it sounds too good to be true, it very well could be.

A two-bedroom Frankston apartment on the market for just $175,000 is less than half the median price of $400,000 for units in the suburb, according to CoreLogic data.

But despite the price, which Hocking Stuart Frankston agent Anthony Sansalone said made it “probably one of the cheapest apartments in Victoria at the moment”, 107/325 Nepean Highway has lingered on the market for almost 300 days.

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The unit is in Frankston’s Ambassador Hotel, a once-exclusive wedding venue a recent Frankston Standard Leader investigation revealed has become rampant with drug use and a hotspot for recently released criminals.

The 110-unit building also has a Section 173 overlay, meaning owners cannot use the property as a principal place of residence — the units must be tenanted.
“Because of that 173 agreement there just hasn’t been the quality owner-occupiers that have had the pride to keep the complex to a certain standard,” Mr Sansalone said.

The former hotel contains more than 100 units.

“You’d be in breach of the 173 if you purchased as an owner-occupier, which limits your targets by a substantial amount. If the 173 was abolished, prices would skyrocket.”

An attempt last year to lift the Section 173 was unsuccessful, but a recent proposal by the building’s body corporate to turn the site into accommodation for over-55s is expected to be looked upon favourably by the Frankston City Council.

“The owners and body corporate need to come together and share a united approach which will seek to improve perceptions of safety and increase the quality of life at the Ambassador site,” Councillor Kris Bolam says.

“To date, I don’t believed the owners and body corporate have provided council with such a road map and therefore council will continue to monitor the Ambassador site with a determination to encourage responsible ownership.”

“If they can exhibit a commitment along these lines, council will then engage with them on the Section 173 overlay on the site.”

One of the outdoor spaces at the Ambassador Hotel.

Frankston City Mayor Michael O’Reilly said in July a cooperative approach between council and owners at the site was “very positive”, although no specific changes were agreed to.

Despite the site’s problems, the unit’s agent remains optimistic that a buyer will see long term, bargain-basement value in the two-bedroom property, as council works with body corporate on initiatives that would see the Section 173 lifted.

“If you were a savvy investor and you could bide your time, all of a sudden the values in there would rise quite significantly,” Sansalone said.

An abandoned wedding chapel at the front of the property passed in at auction in March for $600,000.

In November last year, the chapel was raided by council officers, Victoria Police and the CFA after it was discovered the trashed building was being used as a temporary boarding house.

Frankston Mayor Michael O’Reilly recently told Frankston Standard Leader the council had no plans to purchase the chapel site “at this stage”.

This article from Leader Newspapers originally appeared as “Ambassador Hotel, Frankston: ‘One of the cheapest apartments in Victoria’ comes with a catch”.