The 5.36 hectare block at Lot 101 Faraday Street, near the Ravenswood BWS, could be converted into between 70 and 90 residential blocks.

Its owner is an international investor who is divesting his Australian assets.

Knight Frank Launceston's Sam Woolcock said work was progressing on a sale with several interstate developers.

"We're currently dealing with a couple of parties, but we're dealing offers over $2.5 million," he said.

Construction companies' challenges with rising building costs post-COVID have been well-documented, but the issue is also impacting developers.

Mr Woolcock said he had noticed an increased hesitancy in the market for vacant blocks in light of construction cost increases.

"I think there's been some concerns about the costs of building and some developers have decided not to move forward with their developments given the costs," Mr Woolcock said.

"The funny thing is we've got a housing shortage but ... there's certainly a slowdown for vacant blocks across the board."

A 4600 square metre block on the Bridport beachfront was listed for sale last month with a $3 million price tag.