The project will create an extra six units in the Kirkness wing.
Presbyterian Support Otago director of communications Lisa Wells said the project was still at an early stage and tenders had not been received, but it was expected the cost of redevelopment would be over $5 million.
The development included a new building between the MacKay and Kirkness units, along with a walkway and interior courtyard.
"What that will do is provide extension to the Kirkness unit. The building will ultimately extend from 21 to 27 rooms, with a full ensuite shared between rooms.
"At the moment it's a set-up similar to what you have at an older hospital, with shared bathrooms."
A family whanau flat would also be built, giving visiting relatives somewhere to stay, she said.
Construction would be carried out in stages.
"This is the last of our units to be upgraded to current expectations. There is a need to extend and increase the size of the bedrooms, because more often the way we look after people at a rest-home means we need access to lifting equipment, shower trolleys and different types of equipment, which just aren't able to be manoeuvred in the size of bedrooms we have."
The existing 16 residents in the Kirkness unit would move into the new building in the New Year, to allow the unit to be fully redeveloped, she said.
The home would be "proactive" in finding additional residents for the new rooms, she said.
