A billion dollars worth of investment is being sought from foreign developers to turn prime Auckland waterfront leasehold land into a new family-friendly suburb with a five-star hotel.



The Auckland Council this morning approved what Mayor Len Brown calls a prospectus for investors, which sets out the potential uses for a 28,000 square metre block of land in the city's seaside Wynyard Quarter.

Brown said the development would add to housing options for the city, which has been experiencing rocketing house prices and a shortage of mid-market properties.



The proposal covers two distinct areas of the wider Wynyard Quarter area and includes provision for between 600 and 1000 residential dwellings housing up to 1500 residents.



The level of residential investment being sought was between $430 million and $700m.



Waterfront Auckland chief executive John Dalzell estimated residential dwellings on the land would be priced at between $500,000 and about $1.3m, or about $8000 to $10,000 a square metre. Dalzell said the residential sites would be targeted at a "diverse" group of owners and tenants, but that diversity was not just about affordable housing.



"It's right across the activity that you bring into the site, the diverse range of activities that people from all walks of life can experience down here on a weekend," Dalzell said.



"It's about providing ranges of accommodation, not only in residential but in commercial too, and getting the kids down here."



The land being targeted for investment also included 48,000 square metres of commercial floor area to accommodate 3000 workers within an "innovation precinct".



"Growth is what we need right now and the waterfront is estimated to support nearly 7000 direct fulltime jobs by the end of 2013, generating $710m in direct GDP per year," Brown said.



"Over the five years to 2018, this impact is expected to rise to nearly 11,000 direct fulltime jobs and $1.2 billion in direct annual GDP."



The plan also includes a 200-plus room, five-star hotel on the site of the Team New Zealand yacht base, for which investment of between $70m and $90m will be sought.



Dalzell said the next step would be to take the strategy to private investors to measure interest and eventually report back to the council on the market's response.



He said Waterfront Auckland was open to partnerships, joint ventures or multiple-party contracts as opposed to the standard development agreement, but investors would be seeking certainty.



"The next engagement with the governing body will be around the outcomes of the stage one process and that will set the bookmarks for the transactions.



"That's important from the market's perspective that they can have certainty so that when we enter into the real negotiations around what will constitute the offer ... [they] know as long as you're within those parameters and you've dealt with those issues then the chance of getting approval is much greater than having that left undefined at the front end."



Dalzell and Waterfront Auckland chairman Bob Harvey will soon travel to China with the prime minister's delegation to speak with investors about the hotel site. All up Waterfront Auckland estimated between $730m and $1b would be spent on the area leading up to 2030.



More broadly across the entire Wynyard Quarter development - including the North Wharf bar and restaurant strip, a marine precinct and preparations for further residential development - the council has already pumped in $156m alongside $132m from private sources.



It has targeted private investment of more than $1.4b in the next 10 years to make it a reality while Auckland's long-term plan allows for a total of $441m in council capital investment over the same period.