More than $65 million of new construction will start rising at Hamilton business-science precinct Waikato Innovation Park before the end of the year.

A $20m office project is planned after a $45m new food spray dryer for Food Waikato starts going up mid-year, said the Ruakura park's chief executive, Stuart Gordon.

The two projects will swell the park's daily workforce to more than 900 people, and progresses a master plan for growth at the 17ha site.

The building boost follows two developments: the emergence of a sheep milk export industry tipped to be earn $500m a year within 15 years, and the December sale of the park's property assets by the Hamilton City Council to private investor Neil Foster, a Rotorua businessman.

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The council had wholly-owned the park assets since 2013, but in 2016 said it could not afford to invest in the growth plan and asked Deloitte to find a buyer for the property assets. The land which hosts the park's buildings is owned by Waikato Tainui.

One of those buildings is a spray dryer, built in 2012 and owned by Food Waikato, a brand of NZ Food Innovation Waikato, 70 per cent owned by the city council and 30 per cent by Government agency Callaghan Innovation which supports high-tech business development.

It is this dryer that has supported the emergence and growth of sheep milk exporters Spring Sheep Milk, Blue River and Maui Milk.

The spray dryer is now at full capacity. It recorded 308 days of production which notched up $53m of exports in the year to June last year.

Before the sale, a restructure separated out the Food Waikato subsidiary and the dryer, which remain owned by the council and Callaghan.

Food Waikato will contribute about $1.45m of the cost of the second dryer which will be built alongside and have more than twice the capacity. The balance of the $45m will be funded by debt and equity from dryer users, understood to be the three sheep milk exporters.

The park's property assets, which included shares in the park company which holds the Tainui lease and the leases to tenants, and three buildings, were marketed for $25m in a sale process that took a year.

Waitako Innovation Park's Stuart Gordon predicts the sheep milk industry could be a $500m added-value products earner in 15 years.
Waitako Innovation Park's Stuart Gordon predicts the sheep milk industry could be a $500m added-value products earner in 15 years.

Net sale funds to the city council after professional fees, legal and other costs was about $10m, said council executive director special projects Blair Bowcott.

As a condition of the restructure and in agreement with the Government which was an original park funder, the council invested $4m of the sale funds in the Food Waikato company, he said. The balance, up to $6m, has been earmarked for the proposed Waikato Regional Theatre.

Gordon, who is also chief executive of Food Waikato, said covenants on the property assets sale dictate that any development relates to agri-tech, food and food processing and ICT.

Gordon has predicted the sheep milk industry could be a $500m added-value products earner in 15 years. In two years he expects another wave of industry development in the form of new farms generated by the export drive.

The park's existing dryer was also used by the highly successful infant formula exporter Dairy Goat Cooperative while it built markets and supply before having to fund expansion of its Hamilton processing site with a second big dryer.

Gordon said the dryer is today valued at $25m but had generated more than $135m of investment by new and growing exporters of food ingredients and infant formula products.

The master development plan for the park, which opened in 2004, cites potential for it to grow to be worth $180m within 20 years.