Former All Black Murray Mexted said last night he was devastated after the Hawke's Bay bach he co-owns was destroyed in a suspected arson attack.

The property is at the centre of controversy, with locals upset by plans for a six-lot subdivision on the section.

Mexted said his family had lost a lot of belongings in the blaze at their holiday home on the Mahia Peninsula.

"It's just very upsetting," said Mexted. "We have been coming to the bach for five years. We kept a lot of our possessions there."

Fire investigators are still trying to determine how the fire started, and have not ruled out arson.

The development plans are being opposed by environment group Mahanga E Tu.

One resident said group spokeswoman Margaret Fraser had received calls saying "it didn't look good" for her group.

But Fraser, who lives diagonally opposite Mexted's bach, said she raised the alarm after spotting smoke billowing from the home.

Her husband David went over with an axe and was among residents who pulled some of the bach owners' possessions to safety.

"Even if we had a grudge against Mexted we would not have done it," said Fraser. "We have no grudge against the owners."

Peter Krzanich, who lives on a hill above the bach, says the fire may have been lit deliberately to discredit Mahanga E Tu on the eve of an Environment Court hearing about the development plans.

Residents said the fire brought back memories of another suspected arson, in 2008 in Blue Bay, 10km from Mahanga, which halted another controversial development.

A newly built home was razed to the ground, although no one was charged over the incident.

Mexted's bach, which contained a kitchen and bathroom, was to be pulled down to make way for the six-lot subdivision. Several adjoining storage sheds were also damaged in the fire.