Seedy St Kilda hostel set to make a mint on ‘The Block’

The “scummy” St Kilda hostel revealed as The Block’s newest project has the potential to be the reno show’s biggest ever seller when it’s recreated as five mansions.

Buyer’s advocates and local agents expect the gold rush-era terraces reportedly hidden behind the backpackers’ facade to be worth more than $3 million each once The Block is done with them.

Their location on “notorious” Grey St may deter some well-heeled buyers. But the project could also help revamp the area in the same way as the show’s renovation of the nearby Gatwick Hotel, the experts say.

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The property at 38 Grey St currently operates as the seedy Oslo Hotel, where rooms start from just $44 per night.

But sources have told the Herald Sun the substantial property contains five 1850s terrace houses, which will become the largest pads ever remodelled by the show’s contestants.

“It could definitely set a new Block record,” Advantage Property Consulting director Frank Valentic says of the project.

“The location is colourful — it’s got grunge factor and it’s not for everyone. But it’s right on the doorstep of everything (the beach, public transport, restaurants and cafes).

The building is set to be reverted into five period mansions. Picture: Google Maps.

“It’s definitely an area on the rise.”

The benchmark was set on last year’s season of the Channel 9 show, when comedian Dave Hughes splashed $3.067 million on Josh and Elyse’s winning five-bedroom house in Elsternwick.

Valentic, whose clients regularly shop The Block’s offerings, says several substantial houses have fetched between $3-$6 million in St Kilda in the past six months.

The Grey St mansions’ price potential would depend on the land size they offered, but they should achieve more than $3 million each after The Block reno, he says.

Fellow buyer’s advocate and show regular Greville Pabst says the fact the show had opted to tackle houses, rather than apartments, for the fourth time was “a good tactic”.

“It does appeal to a market that has been reasonably strong — the family house and downsizer market,” he says.

‘The Block’s’ current project: St Kilda’s Gatwick Hotel. Picture: Ian Currie.

But he said “Grey St as a location has some challenges around reputation” that may put off buyers from blue-chip areas like South Yarra and Toorak.

McGrath St Kilda principal Michael Townsend expects the houses to have “huge appeal” among local buyers who are already attached to the area’s lifestyle perks.

He says it is rare for one spectacular mansion to be up for sale in St Kilda, let alone five at once, so the listings will test the suburb’s prestige market.

“The whole area is gentrifying before our eyes — The Block doing The Gatwick has already been felt in that corner of St Kilda,” he says.

“The Oslo is one of the last remaining scummy looking hotels. With The Block coming in and waving a paint brush over it, it can’t not change that whole section (of Grey St) as well.”

Townsend estimates the Grey St property would have set Channel 9 back “circa the same price, maybe a little bit more” than the $10 million Gatwick, while Valentic says the cost was likely about $7.5 million based on comparable sales.

This article from the Herald Sun originally appeared as “The Block’s St Kilda backpackers’ makeover tipped to be a goldmine”.