SA National Parks (SANParks) may expropriate the Sentinel, a Hout Bay icon it believes should form part of the Table Mountain National Park.
It will also "strongly oppose" any move to build new access roads across its land to reach the Sentinel, which is surrounded on all sides by the national park.
These two factors, and the violent protest on Wednesday by members of the local community opposed to the sale of the Sentinel, are likely to make prospective buyers hesitant about becoming the new owner of the mountain peak.
About 300 protesters held a demonstration outside the Chapman's Peak Hotel on Wednesday, where the auction of the Sentinel was taking place. When the crowd started throwing stones, police fired rubber bullets and stun grenades to disperse them. The auction was called off and no arrests were made.
One of the registered bidders, who spoke to the Cape Times on condition of anonymity, said yesterday the auctioneers, the Julius Buchinsky Group, had said the Sentinel owners had refused an offer of R15-million and that bidding would start at R10m.
"But there were no bids at all. Then when all the hassle started outside, the whole thing was abandoned," he said.
The Sentinel is owned by G&R Marine Services, which bought the land in 2004 for R468 000. Mike Slayen, of Table Mountain National Park, said registered valuers had put the value of the Sentinel at R500 000.
The valuers had taken into consideration the rugged nature of the terrain, not conducive to development, and the rural zoning, which allowed only a single dwelling.
"We are exploring all options, including expropriation," Slayen said.
Leno de Villiers, of Julius Buchinsky, said SANParks had not told it that it was considering expropriation.
"The SA Revenue Service put the value at R11m, which it did when one of the owners died. The amount SANParks is offering is just unrealistic," De Villiers said.
He said because of the outcry from the pubic, it would hold a private bid.
Hangberg residents fear the new owners will fence off the land and they will no longer have access to it.
Zubeida Samuels said yesterday: "It's not right. That mountain is there for the snakes and animals. Parks must take it. All the years we've walked around on that mountain. Now they will put up fences."
Hilton van Neel, one of the protesters, said: "They will build houses for the rich whites and we won't be able to afford them and our rates will go up. Since I was a boy I used to play on this mountain."
Isaac James, chairman of the Hout Bay Civic Association, said: "The city council should buy the property and build houses there for us. We want houses."