Wolfgang Porsche, the Austrian-German automotive magnate, appears to have abandoned plans to build a private 500-metre tunnel for his cars through the Salzburg hills after a public uproar over the “tunnel for one”.

In 2020, Porsche bought a storied 17th-century villa on the outskirts of Salzburg for €8.4m (£7.2m), and last autumn he secured permission from the city authorities for an estimated €10m private access road through the rugged limestone hill.

The 83-year-old’s vision was for the tunnel to lead from a municipal car park in the city centre to a subterranean garage next to the villa where he would be able to park eight cars.

The proposal sparked incredulity and anger among many locals, not least because of the historic nature of the property, which was once the home of Stefan Zweig. The Jewish writer lived in it until he was driven out of the city in 1934 by the Austro-fascist regime.

It appears Porsche has performed a dramatic U-turn, putting the 12-room estate, known locally as the Paschinger Schlössl, on the market instead. A new owner would be permitted to build the tunnel, although they would have to rush to do so as the planning permission – for which Porsche paid €48,000 – is valid only until the end of 2028.

City authorities have dashed the hopes of those who have campaigned for years, since long before Porsche bought it, for the villa to come into state hands and be turned into a museum dedicated to the memory of Zweig. Bernhard Auinger, the mayor of Salzburg, said the city could not afford to buy it.

Zweig, whose memoirs inspired the Wes Anderson film The Grand Budapest Hotel, described the house as “romantic and impractical”, writing that among its charms was that it was “inaccessible to cars” and could “only be reached by climbing the more than a hundred steps” of the Kapuzinerberg, the hill on which it is set.

According to local media reports, the backlash over Porsche’s tunnel plans, which protesters called the height of inequality in a city in which many residents are increasingly battling a housing shortage and extortionate rents, contributed to his decision to sell.

“A city for everyone instead of a tunnel for one,” was one of several protest slogans that were hung around Salzburg at the height of the protests last year.

While opponents of the tunnel are claiming victory, the Greens in Salzburg are calling on city authorities to go a step further and withdraw the planning permission, suggesting it had contributed to the property leaping in value.

“It cannot be that public land is being used for real estate speculation,” Ingeborg Haller of the Greens told Austrian media. “This is about equal rights for all. It cannot be that only those who can afford it receive permission for a private tunnel.”

The villa is now on the market for €12.7m (£11m), with the estate agents citing the planning permission for the tunnel as one of the property’s highlights. Potential buyers are told in the sales pitch that they will be “seduced by” the accompanying “remarkable, approved private tunnel project” and “unique annex for underground garage”, which “elevates the property into a category of its own – an unparalleled feature within historic Salzburg”.

A real estate manager for Porsche confirmed to the Salzburger Nachrichten that the car boss had put the property up for sale. He refused to say what had motivated Porsche to abandon the project, but described the row that had developed around the tunnel as an “envy-driven debate”.

He said it was doubtful that Porsche could have managed to live in the villa as he had originally envisaged along with his new wife, Gabriele zu Leiningen, who was once married to the former Aga Khan.

Speaking on behalf of the family and not Porsche AG Holding, a spokesperson said: “No statement will be made on that matter”.