Sections at The Lakes subdivision ended up over-priced and contributed to slow sales, building industry sources say.
The receivership of the giant development in Pyes Pa West has been received with sadness by the development sector and city leaders.
Building firms contacted by the Bay of Plenty Times said they
would provide land and house packages at a more affordable $400,000 and less, by paying around $130,000 for a 500-600 sq m section.
One firm said it was interested in buying 20 lots but the developer wanted to sell individual lots and create competition amongst the builders.
"We were never prepared to commit to buying land at the prices they wanted, but there is real demand in Tauranga for houses under $400,000," said the firm's manager, who spoke on condition he was not named.
"I feel for Grasshopper - they had the costs of the development, the council fees and the medium density dreams forced on them," he said.
Tauranga mayor Stuart Crosby said Grasshopper had been open and professional to deal with.
"I feel for them. They have put so much into the community and the city should be proud of their product.
"Their pre-sales didn't eventuate and that severely impacted on their cash flow. It created a cascade. They were caught at the wrong time by the credit crunch," said Mr Crosby.
He said the receivership was no risk to the council - other than the economic slowdown. "There are 2000 sections available across the whole city, and there needs to be a price adjustment.
"Talking to the bankers and developers, a $10,000 difference to a section price can make a world of difference in selling a land and house package."
