Development restrictions and the current property market contributed to what could be a $1million loss from the sale of its Holdens Bay Holiday Park, the council says.

Prospective buyers gathered at the BNZ Partners Business Centre yesterday when the park was auctioned by Bayleys Rotorua.

With four parties taking part in bidding, the park eventually sold for $982,000 to a Rotorua businessman, who wished to remain anonymous.

The holiday park was bought by the Rotorua Lakes Council in 2007 for $2.27million as part of the Rotorua International Airport redevelopment project.

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However, the property was put on the market this year because it had been identified as surplus to needs.

A four-bedroom house the council bought with the holiday park, was listed separately and did not sell at auction.

Bayleys Rotorua manager Beth Millard said the holiday park sale was a "great outcome".

"Having the holiday park sell at auction relieves the council of their responsibility.

"Prior to auction we had a wide range of people look at it, including prospective out-of-town buyers."

She said the property was sold at a fair market price.

"When the council bought the property in 2007 Rotorua was experiencing the hottest market it has ever had. Now we are seeing a stable market but one that lacks growth.

"The council has not been the only property owner to buy in 2007 and take a loss when selling in the current market."

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The council's chief operating officer, Thomas Colle, said the sale price reflected current market conditions and "we have to live with that".

"It's part of an investment in future-proofing and developing our airport runway to meet new safety standards and to accommodate modern aircraft requirements."

He said that, since buying the property, the council had placed legal restrictions on its development potential to protect runway operations and "this has, not unexpectedly, impacted on its market value".

"There still remains a residential property to be sold and this will further offset the cost to the council in due course."

Money from the sale is expected to be redirected towards reducing the council's debt.

Mr Colle previously told the Rotorua Daily Post the original strategic purpose for acquiring the holiday park had been met.

"The sale of the Holdens Bay property is part of a wider strategy to identify and sell properties no longer needed by the council, and to redirect the revenue to debt reduction."