Goodland Group is building 40 new units on an existing 24-section subdivision it owns on the old Oamaru Hospital site.
A Goodland Group spokesman described the development to the Otago Daily Times yesterday as "visitor accommodation".
He said the company was flexible on whether it would prioritise it for long or short-term rental agreements, based on "how the market reacts".
The goal was to have the unit-style development finished by the end of the year.
Goodland Group has had an interest in the site for over 20 years.
It announced the demolition of the old "hospital on the hill" in 2016, with plans for a housing development on the site.
Depending on the success of these units, Goodland Group would consider adding more in the future, the spokesman said.
However, the company was confident the high demand for housing in Oamaru would continue to grow.
Business South Waitaki navigator Rebecca Finlay, the author of the regular "Waitaki Rising" column in the Oamaru Mail, suggested in December there was an accommodation affordability issue in the area.
She said while rent prices in Waitaki were often perceived as more affordable, it was not that simple.
Nearly a quarter of households in the district rented, she said.
She said the average rent accounted for 20.3% of the average household income — making Oamaru less affordable than Auckland.
Waitaki Mayor Gary Kircher said he was eagerly awaiting Goodland’s decision on how it would make the units available.
"Depending on their long-term decision, [it either] provides opportunities for visitors to stay here or for locals to have more rental accommodation available.
"Increasing the capacity of either is helpful ...
"If it does go down that route, I think it would be really good."
He said the Observatory Village had "shown the appeal of apartment living" in Oamaru for older people particularly.
"There’s 32 apartments, there’s another 10 being built at the moment up at the Observatory Village and they are well sought after by people looking to move here.
He also saw the benefit in having new visitor accommodation to help ease the pressure during the busy times of year.
"As much as people might come here for heritage, they often want to stay in modern accommodation and it provides more options for that."
