The 147-year-old building in Itchen St, with a rateable capital value of $280,000, has been owned by Musical Theatre Oamaru since November 1992.
The western half of the Historic Place Category 1-listed building opened on July 11, 1868 as an extension of the Star and Garter Hotel.
At the time, the hotel was described as ''the finest hotel building in the province, if not the colony''.
The building has had a variety of tenants over the years.
The eastern half is owned by the Oamaru Repertory Society.
The half listed for sale is used by Musical Theatre Oamaru as rehearsal rooms, and also houses the society's executive meeting room and storage rooms for props and costumes.
It is also partially tenanted by 45 South TV, downstairs.
Musical Theatre Oamaru president Dan Lewis said the sale of the Itchen St property was stage two of a plan to develop a new purpose-built facility, combining rehearsal, workshop and wardrobe spaces.
''At the beginning of this year we sold our workshop on Tyne St, being stage one in our plan to develop a new combined facility on a single site,'' Mr Lewis said.
''What we are aiming for is a purpose-built rehearsal, workshop and wardrobe space which will also be available for other dance and creative groups to utilise.''
With an asking price of $299,000, the Itchen St property is described as a ''significant building'' in Oamaru with potential to be restored as a hotel.
''We'd love to see our building be restored to its former glory as a hotel, or it would make some fabulous apartments - it's in a premium location with plenty of parking,'' Mr Lewis said.
