Dunedin developer Stephen Chittock, who owns Majestic Mansions, said the sale would help fund the building of up to 20 apartments and four retail units on a 1000sq m section now occupied by the Esplanade Motel and a house.
"The existing space is well under-utilised. The key is to retain the area as a people place... with retail such as a bakery, gallery or a jewellery shop offering an additional interest to visiting the beach," Mr Chittock said.
In October 2006, the Esplanade block was rezoned from residential 1 to local activity 2, which allows for small-scale businesses, retail shops, apartments and restaurants, the maximum building height being retained at 11m.
Any proposed development compliant with the zoning does not need to be publicly notified.
The motels would continue to operate through the summer and then be closed, Mr Chittock said.
Demolition of the motel block and adjacent house could begin by mid-2010.
Mr Chittock spent more than $350,000 on the three-storey Majestic Mansions in 2006, when the former flats were redeveloped into 12 serviced apartments.
The building, built in 1920, has a rateable value of $1.4 million, and the sale is being handled by Cutlers.
Mr Chittock is not ruling out taking on a joint-venture partner for the new development, but a sale of the Majestic Mansions and selling title to some of the 20 new apartments would assist funding, he said yesterday.
In recent years, he has bought nine of the 11 residential properties within the Esplanade block, and owns the beachfront motels, Swell restaurant, and the Majestic Mansions.
• The separate, $11 million, three-storey, 26-room St Clair Beach Resort boutique hotel, with restaurant and bar, is a joint venture between Mr Chittock and the property arm of Calder Stewart.
It is nearing completion, its opening scheduled for October.
A total of $2.8 million was paid for the three houses originally on the hotel site, on the corner of the Esplanade and Beach St.
