South Melbourne bathhouse on brink as heritage delays threaten $5m project

A $5 million bathhouse development in South Melbourne is on the brink of collapse, with its owner warning that ongoing heritage permit delays have left the project’s future hanging by a thread.

Else Bathhouse, planned for a three-level building at 234 Bank St, was originally slated to open in April and would bring rooftop “sky bathing” pools, thermal baths, saunas, a mud and steam room, alpine cabin and relaxation lounges to the Emerald Hill precinct.

The project has already been approved by the City of Port Phillip, but still requires a permit from Heritage Victoria because the building sits within the State-listed Emerald Hill Estate.

While the building itself is not individually heritage-listed, Heritage Victoria said the broader listing covered properties on Bank St and that “any works or activities to those properties need Heritage Victoria approval”.

Owner Paul Absalom said the project had been designed to respect the building and surrounding precinct, with advice sought from architects, conservation consultants, heritage specialists, engineers and technical experts.

We wanted to create a beautiful bathhouse experience, a world-class bathhouse experience that leverages off the heritage nature of the building, Mr Absalom told Southbank News.

“Everything we did all the way through with our designs and our systems and processes have been designed to protect the heritage nature.”

Mr Absalom said two heritage and conservation architects had assessed the proposal, with one concluding the heritage impact would be “limited” while introducing a compatible new use, and another finding the proposal was appropriate and would have a “negligible heritage impact”.

But the permit application remains unresolved, months after it was lodged with Heritage Victoria on December 19.

Heritage Victoria said it was currently assessing a permit application for the internal fit-out of the bathhouse and that a determination had not yet been made.

It said it became aware on November 27, 2025, that unauthorised works had been undertaken by the applicant, “primarily the construction of the baths and associated services including plumbing and in-floor heating”, which required approval under the Heritage Act 2017.

“Heritage Victoria has requested further information from the applicant regarding the impacts of the proposal as we work towards a resolution,” a spokesperson said.

That information is required by June 22.

In response, Mr Absalom said, “all works have been based on heritage advice”.

He added that Heritage Victoria had raised concerns about the proposed use and moisture, but argued the issues had already been addressed through technical reports, including a hygrothermal report examining heat and moisture impacts.

He said delays had already caused significant financial damage, eating into the project’s rent-free period and leaving the business unable to open.

“The project was ready to go, and then all the suppliers to complete the project were ready to go,” he said.

“We’re talking about hundreds of jobs to quickly and efficiently get this done.”

He said the cost of existing works, operating expenses and lost trading opportunity was now “costing millions”.

“If that doesn’t happen, then we don’t have a business,” Mr Absalom said of the need for a permit to complete the fit-out and begin operating.

Investor Dr Pat Bowden, a cancer specialist and former director of the Peter MacCallum Tattersalls Cancer Centre and Epworth Healthcare network, said the project would preserve the building’s facade and deliver only “negligible external impact” apart from inconspicuous signage and rooftop cooling units.

“The site has been vacant for over two years, and two prior office tenancies have failed,” Dr Bowden said.

“Therefore, the bigger conservation risk is this property becoming derelict. We would be ensuring its survival and vitality by investing millions of dollars enhancing it.”

The project has also received support from City of Port Phillip South Melbourne Ward councillor Beti Jay, who described it as the kind of development that balanced conservation with activation.

“This proposal demonstrates a genuine respect for that heritage, preserving the architectural integrity of the existing building while thoughtfully adapting it for contemporary use,” Cr Jay said in a letter of support.

She said the bathhouse would transform a site that had historically been difficult to tenant and bring “consistent, purposeful activity” to the area.

“The Bathhouse does not simply occupy a space; it activates it,” Cr Jay said, adding that it would strengthen passive surveillance, improve local amenity and contribute to a more vibrant and secure streetscape.

South Melbourne Business Association president Anne Micheals said the group saw Else Bathhouse as the kind of destination needed to help revitalise the Emerald Hill and Clarendon St precincts, which she said required greater activity, investment and visitation to reach their potential.

She said the bathhouse would complement ANAM, the South Melbourne Town Hall revitalisation and planned public realm improvements, helping create a more vibrant cultural and community destination while improving safety through increased activity and passive surveillance.

“Against this backdrop, we believe Else Bathhouse would be a wonderful addition to the Emerald Hill precinct,” she said.

Mr Absalom said the building had previously been used for industrial purposes, including brick storage, and later as offices, but that Else Bathhouse would open it to the public for the first time in its history.

He said the project would complement the major investment under way at South Melbourne Town Hall and help activate Bank St.

But unless Heritage Victoria grants the permit soon, he said the message to other start-ups considering Victoria was bleak.

“For small businesses and startups, you would just avoid investing in Victoria,” he said.

Mr Absalom said the state’s tourism ambitions, including its focus on wellness and bathing under Experience Victoria 2033, were being undermined by the very approvals system businesses had to navigate.

“There’s a disconnect between different agencies within the state government,” he said.

“On one hand, they’re pushing tourism. On the other hand, we’re being blocked here.”

Heritage Victoria said it was continuing to work towards a resolution.

State MP for Albert Park Nina Taylor was also contacted for comment. •