Nov. 5 (Bloomberg) -- An auction of Rio de Janeiro’s Hotel Nacional was canceled after potential buyers declined to offer the minimum price of 118.5 million reais ($69 million) for a property that has been closed for 14 years, the auctioneer said.

None of the five investors who registered for the auction, scheduled for yesterday, put up the 23.7 million reais deposit required to make a bid for the designated landmark, auctioneer Maria Teresa Brame said in an interview. The asking price could fall by at least 20 percent in an auction rescheduled for January, she said.

“The price being asked was an absurdity, especially given the substantial renovation work it requires,” said Brame, who didn’t identify the registered bidders beyond saying four were from Europe and one from Brazil.

After Rio was awarded the Olympics last month over Chicago, Tokyo and Madrid, Mayor Eduardo Paes said he would cut property taxes and redraw zoning laws to attract investment needed to double the supply of hotel rooms.

Oscar Niemeyer designed the landmark Hotel Nacional as well as the futuristic capital, Brasilia. The property sits in Sao Conrado, Rio’s most-expensive beachfront neighborhood. Its last owner, Interunion Capitalizacao SA, declared bankruptcy in 1995 and the hotel has been empty ever since.

Paes has been trying to find a buyer for the cylindrical 34-floor tower where Michael Jackson and Miles Davis once stayed. Hotel chains such as Marriott International Inc. and Starwood Hotels & Resorts Worldwide Inc. are scouting the city for property ahead of the 2016 Olympics, to be held in the Brazilian city.

“This could send the wrong message to the real estate market,” said Ricardo Mader, head of Jones Lang LaSalle Hotels in Brazil. “The image of an empty landmark at a time when investors are hunting for properties is very negative for Rio.”

Mader estimated that the asking price is equal to about 40 percent of the renovation costs required to reopen the hotel.

To contact the reporter on this story: Joshua Goodman in Rio de Janeiro at jgoodman19@bloomberg.net

Last Updated: November 5, 2009 15:27 EST