A four star 55 bedroom hotel that once counted the former British Prime Minister Tony Blair as a regular guest has sold at bargain basement prices in Donegal.

The 55-bedroom Sandhouse Hotel fetched $900,000 when it sold at a distressed property auction in Dublin.

The four star establishment, overlooking Donegal Bay, was once on the market for a whopping $10million.

Blair was a regular visitor with his family in his childhood to the hotel which has sold for less than the price of a two bedroomed apartment in Dublin at the height of the Celtic Tiger property boom.

The sale was authorised by the hotel’s liquidators KPMG and just reached the reserve price of under a million dollars.

New owner Paul Diver has managed the hotel for the past 20 years and is determined to restore it to former glories.

He told the Irish Times: “I just can’t believe it. It’s a total adrenaline rush. It’s been a long, long road but we’ve made it.”

There was little interest in the property. “No, I wasn’t surprised by the lack of interest, I was delighted,” stressed Diver.

Over two thousand people attended the auction with two-thirds of the properties sold by direction of receivers.

Director of auctions at Allsop/Space Robert Hoban said: “At every auction the percentage of private vendors is increasing as more and more people want to put their properties out on the open market.

“We don’t decide the sale price or value of the property, we let the punters decide where property value is and let them decide whether the market is going up or down.

“The active bidding present is a clear indication of the appetite that still exists for property in Ireland once priced sensibly.”

The latest action realised over $15million worth of sales with 94 per cent of the properties sold and seven withdrawn prior to auction, including one cottage in Leitrim for $10,000.