The hotel was knocked down by the ClareMart Auction Group for an inclusive R50.1m on Thursday.
The bidding was highly competitive and the auction came to an end within 20 minutes.
However, it also marked the end to the dreams of over 3 300 investors who collectively invested about R616m to fund the 144 room beach front hotel development.
The incomplete development is estimated by sources to have a current value of at least between R80m - R120m and was at the centre of the Realcor Cape scandal.
The development ran into financial trouble in 2010. In August last year Midnight Storm Investments 386, the firm that owns the hotel, was placed under liquidation.
ClareMart Auction Group said that it was instructed by Midnight Storm’s liquidators to sell the unfinished hotel.
Bidding on the development was fierce, with four investors bidding aggressively on the property.
“The bidding started at R25m and over a period of 20 minutes reached the final bid price of R44m," said ClareMart chief executive officer, Jonathan Russell Smiedt.
One of the liquidators, Stephen Gore of Sanek Trust Recovery Services, said in a statement that the liquidators aimed to sell the property at the best possible price to recoup as much as possible for the investors.
But investor activist Daryl Ducasse of Merkurius Capital Solutions said investors will not see a cent of the money and described the final amount as a travesty of justice.
He cautioned that this loss should serve as a reason why creditors should not just be permitted to rush into liquidations without seriously considering and giving business rescue a chance to succeed.
"We don’t believe the auctioneers did an adequate job of marketing the opportunity," Ducasse told Fin24.
He said that parties were interested at higher levels, but wished to maintain their privacy and therefore did not want to work through a public environment.
"This illustrates that the auction process is not necessarily the most appropriate method of realising an asset – there is still the age-old perception and influence that distressed value brings to an auction, resulting in a ‘knock-down’ value.
"If creditors and liquidators are willing to afford more time to the process, I am confident that far better value will be realised."
Steps were taken in an attempt to stave off final liquidation but it was marred, said Ducasse.
"Our initiative was thwarted by the actions of two irrational and ill-informed financial advisers who saw fit to both ignore the evidence of misappropriation of funds by Realcor management and, alleging to represent all the investors, reject a proposal which we put before court that would have seen the investors ending up with 90% ownership of the completed development," said Ducasse.
"Had all the investors and financial advisers rallied in support of the initiative at the time, it is highly unlikely the investors would be in the position they are today," he said.
However, this was not the only attempt at rescuing the company.
Rayhaan Hassim, via Southern Palace Investments 265, brought a business rescue application that was dismissed with costs, said Ducasse.
"We also assisted Bonatla in bringing a business rescue application on the understanding that funds were available to acquire and complete the development to the benefit of both Bonatla and the investors.
He said it late rturned out that this was not the case, and the application was dismissed with costs.
Ducasse also took a swipe at the law. "It seems that the judiciary is not flexible enough of mind to afford business rescue an opportunity to succeed."
The creditors would have been in no worse position today had the applications been granted as far back as April 2012, he added.