The Southland Times has reported that the developers of a proposed $130 million housing development in Invercargill forfeited their $260,000 deposit on land they had proposed to subdivide after failing to provide the remaining money needed to settle the $2.6 million deal.

Rockdale Holdings Ltd accepted an offer from Queenstown-based developers Prosperous Group Ltd to buy a 60ha site. A deposit was paid in September and a settlement date was set for March 21.

Prosperous Group Ltd investors Michael Morel, his wife Lesley Telfer-Morel and business partner Mick Palmer said in November lthey planned to build a 660-lot subdivision on the site.

Representing Rockdale Holdings Ltd, Cruickshank Pryde partner Lester Smith said the contract between his clients and the developers had been cancelled on Monday.

"The agreement has now been cancelled and the deposit forfeited ... they've lost that money." He said he understood the developers were unable to find the money for the deal.