Morris Property Group turned the first sod on the development, dubbed Renaissance, on Wednesday.

The developer plans to build 400 units across its three blocks on the site with the first stage for 94 apartments expected to be completed late next year.

Morris Property Group director Barry Morris said 65 of the units in the first stage had already sold. He said there were 100 apartments allowed for the stage one block but that a lot of buyers wanted to amalgamate two units.

It came as the developer revealed last month it had halted the construction of residential apartments on its One City Hill development on London Circuit as it did not meet its sales targets. The developer said this was due to the coronavirus pandemic.

When asked why there was more confidence in Renaissance, Mr Morris said it was due to a greater owner-occupier market, whereas One City Hill had a large number of international student buyers.

"Primarily it's owner-occupiers who prefer to live in an area where they have amenity and lifestyle not just a work environment," he said.

"The difficulty in the city is it's largely a working area ... and of course the city has a lot of amenity in shopping and education whereas you come here you are in the suburbs but the city is only five kilometres away."

The developer is looking at commercial opportunities for the One City Hill site and possibly offices for a government department.

The Renaissance development will be built in five stages over five years. Mr Morris purchased the former public housing blocks for more than $55 million at an auction last year.

Demolition of Stuart Flats started about a year ago and a development application was lodged in December. Five buildings of varying heights are planned and the highest will be seven storeys.

A medical centre is also planned for the site.

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Morris Property Group is not the only developer that will build on the former public housing site. When it was sold, the site was divvied up into four blocks.

A fourth block was purchased by Bisa Property, the developer of East Hotel. Its development, dubbed Illume, will have 70 units, with almost 500 units planned across the former Stuart Flats.

Renaissance's sod turning came after Manuka business owners have called on development to revive the area following the closure of Capitol Theatre.

Mr Morris said there would be about 1000 people living in the precinct.

"That's a thousand more people wanting services and amenities that alone will give a boost to those retailers," he said.

"The project will vastly improve public safety and replace an eyesore with green space and pathways between buildings, extending the village feel that has long been a hallmark of Manuka."

Demolition has also recently begun on the former post office building in Manuka to make way for a five-storey hotel.