Construction has started at Euro City's new multimillion-dollar home on Napier's Prebensen Drive.

It is part of a large-scale commercial development on the former site of Massey University's Hawke's Bay campus.

Euro City owner Terry Elmsly is also the developer.

He had originally planned one of the biggest retail centres in the central North Island on the opposite side of Prebensen Drive, adjoining the railway, but the government land was earmarked for a possible Treaty of Waitangi claim.

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Instead he has broken ground beside Ford Rd, where some retail and commercial tenants are already in place, including Complete Paints and Pet 2 Us.

The new Euro City vehicle dealership will front the site and is designed to impress. European car manufacturers require high specifications for agents' buildings.

Mr Elmsly said while Prebensen Drive was not "car alley", it was an ideal location because of high visibility and traffic flow.

Completion is expected at the beginning of next year.

"The new Euro City dealership will feature a state-of-the-art showroom, the perfect showcase for the coveted brands of Audi, Volkswagen and Skoda," he said.

"Demand for these vehicles is increasing nationally and we have outgrown our current premises.

"Our priority is to provide more service and choice to our local customer base. It will also ensure we remain competitive as we can offer a more comprehensive range of both new and second-hand vehicles.

"Our service department will also have the space it needs, again to satisfy the growing demand."

Project manager is Steve Birkhead from Havelock North firm Integrating Architecture, and local companies Architecture HDT, Strata Group Engineering, Patton Engineering, Alexander Construction and Stead Construction are also involved.

Mr Elmsly said that with his business in growth mode "the time is right for this development".

"My vision is that the new dealership will ensure continued and better service for our loyal customers, along with helping to boost Hawke's Bay's economy."