Gray's funeral director Judy Thompson said the site was ideal, especially as it was right next to the cemetery and large enough for the buildings planned.
"There was nothing else big enough, close enough to town. It's only five minutes from town and right next to the cemetery. We will be able to cater for bigger funerals," she said.
The owners hope to be in the new development by May next year.
The new complex, with access from the Kauae Cemetery driveway, will be eco-friendly with ponds collecting run-off from the hills behind the buildings and rainwater collected to be used for its needs.
"It will blend into the countryside nicely. It will be eco-friendly with ponds collecting water which will be irrigated onto gardens. We will have our own sewage system ... There will be a water feature with a pond at the entrance. We will have the same lovely rose gardens and daffodils as we had before," Mrs Thompson said.
Old buildings from the previous site will be moved on to the site and extended, and there will be two new chapels - one attached to the main building, the other behind the main building which will look like a church and seat 140 people. "It will be in natural colours ... There is still a lot of work to be done with planting and fencing."
Mrs Thompson said there would be a workshop where monumental headstones would be made, a shop where people could view them and a whanau building for families who wished to stay on site with their loved one during the tangi. "It's going to be very nice and will cater to people's needs."
The lease for the Ngati Whakaue land is long-term.
"It will be our permanent home," Mrs Thompson said.
Rotorua District Council manager planning services Liam Dagg said once built, the funeral home would be the biggest in Rotorua covering 1.72ha on a 271ha parcel of land, part of 530ha bordering Ngongotaha Rd.