A Ngongotaha site on the shores of Lake Rotorua has been chosen for a state-of-the-art dementia village expected to be the first of its kind in the Asia-Pacific region.

Whare Aroha CARE bought a 1.3ha site in Taui St to build the village for up to 80 people. It will include a lakeside promenade, supermarket and cafe.

Design inspired by an acclaimed Dutch dementia village De Hogeweyk will signal a change in approach to the care of the elderly.

Whare Aroha CARE's Hinemaru St lease is set to expire, prompting the move. General manager Therese Jeffs said securing the lakeside site meant the group could finally realise its vision of a flagship village.

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It was expected to look like a typical New Zealand town with a main street running down to a lakeside promenade, she said. There would be small households with their own kitchens, dining rooms and laundries, as well as retail and hospitality services.

"It's a model that reflects the direction we have been heading in over the last few years - one which supports the idea that the elderly are not dying of illness and disease but loneliness, helplessness and boredom," Mrs Jeffs said.

The deal was sealed following consultation with the community and geotechnical examination.

Resource consent to develop the site is nearing completion. The development will be partly funded by Rotorua Energy Charitable Trust which last week pledged $750,000 towards the project.

"Whare Aroha CARE is extremely thankful for this contribution which will give the Rotorua community access to world-leading dementia care."

Mrs Jeffs said the Eden Alternative philosophy aimed to improve the well-being of residents by providing companionship, allowing people to give care as well as receive it, and an environment filled with spontaneity and variety.

The design would be revealed onsite at an open day early in 2015 and the village, which could eventually cater for up to 200 residents, was expected to open by May 2017. Whare Aroha CARE is owned and managed by Rotorua Continuing Care Trust.