Douglas’s Castle Mona Hotel has been sold at auction for more than £1.2m.

It was the subject of a hotly-contested bidding war at Lambert Smith Hampton auctioneers in London.

The bidding began at the £750,000 reserve price, with a proxy bidder going to about £1m before the bids went back and forth from a bidder in the room and one on the phone adding £10,000 to each bid.

The winning, unknown bidder, who was in the room at the auction house, eventually paid £1,210,000 for the iconic site.

Last October, the prominent promenade building was due to go under the hammer when it was withdrawn on the day following what was then described as a ’six-figure’ sum deal.

As recently as the start of this year, the Sefton Group was still determined that sale would be finalised.

However, that dealfell through as the new owners failed to raise the funds.

At the time, Sefton chief executive Brett Martin said: ’For a number of months we have been working closely with a prospective buyer but unfortunately, despite several deadline extensions, they have failed to complete the purchase.’

It was announced in April that the hotel would once again be up for auction.

The site includes the 98-bed hotel with historic ballroom, dining and function rooms, a bowling alley, mini arcade and two nightclubs.

Built as the residence of the fourth Duke of Atholl in 1804 before becoming a hotel in 1831, it then closed in 2006 before being mothballed as plans for it to be developed into a four-star hotel never materialised.

The Sefton Group announced it was up for sale in 2011 and the hotel has existed in a state of limbo ever since.

It is unknown what plans the mystery new owners have for the building, but many will hope it may finally bring new life to one of the island’s best known buildings.

It is also unknown whether the option to buy the entire Castle Mona and Palace complex, as detailed in the auction listing, will be entertained by the new owner.

The Sefton Group last week announced plans to move the Palace Hotel and Casino to the Middlemarch site, which is bordered by Walpole Avenue, Fort Street and Lord Street in central Douglas.