The largest parcel of residential land ever auctioned by the Land Development Agency failed to sell on Tuesday.
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Denman Prospect, which will be the third suburb in Molonglo Valley, will be sold through negotiation as just one party qualified to bid in the auction.
The auction did not go ahead and the bidder then made an offer that failed to meet the reserve price.
The 107-hectare site includes a local centre and up to 1700 dwellings.
Land Development Agency chief executive David Dawes said the decision had been made to enter into an exclusive negotiation period of 10 days with the company and he was optimistic the land would be sold during that time. While he could not reveal the name of the company or the reserve price he said the firm had been involved in development in and around the territory and had built high-quality projects.
Mr Dawes said while he was surprised only one bidder had qualified for the auction, from an economic point of view it demonstrated the situation around the nation.
He didn't think the price of the land would have deterred any development companies and the government had been open to negotiating favourable settlement conditions.
Mr Dawes said the conditions potential buyers had to meet included appropriate guarantees and proof of financial backing.
Mr Dawes said the LDA had previously had a company pull out of a project after finance was not provided.
The auction, which was to have been conducted by Colliers International ACT, had already been delayed twice - the latest delay made at the request of potential bidders to give them time to fully brief boards.
Chief executive Paul Powderly said some bidders had been initially interested in the land but had
subsequently purchased other projects.
He said others had had the required experience but had not had the financial ability to meet the criteria and some had been taken over by new boards.
But he said the scale of the project should not have stopped local developers from taking part in the auction.
"I'm sure that local companies would have made it into the process if they'd wanted to," Mr Powderly said.
Neil Evans, executive director of Housing Industry Association southern NSW/ACT, said a number of ACT government auctions had passed in in recent times only to be sold through negotiation.
He said the slowdown in housing starts and the quieter housing market may have contributed to developers' decisions not to invest in such a large project.
"You would think there would be more [interest] given the location of the development - it's only seven kilometres to the city, it's not a bad area," Mr Evans said.
"Things might just not stack up at the moment."
He said the land in Molonglo had been selling at quite high prices when compared with other areas in Crace and across the border in NSW.
