The six-level, 110-suite hotel will be known as The Knight, named after Sydney artist Jasper Knight.
The serviced apartment complex is the latest in a string of boutique hotels APBC is building in Melbourne.
It is also developing The Olsen in South Yarra and The Larwill in Prahran.
APBC director David Deague said the company expected to start construction of The Knight, at 616 Glenferrie Road, this year. Existing buildings will be demolished.
The City of Boroondara council has opposed the controversial project for several years. It fought to have the former government-owned land turned into some kind of affordable housing project. Instead, the Government sold the land to developers two years ago.
Boroondara mayor Jack Wegman told Capital Gain that 616 Glenferrie Road was an opportunity to apply Melbourne 2030 policy to Hawthorn, by providing much-needed affordable housing stock.
He said he was disappointed VCAT did not recognise views from the Hawthorn Town Hall.
A VCAT spokeswoman was unavailable for comment.
Police based at the Glenferrie Road station were moved to other stations in the Stonnington area about five years ago.