The Provincial Growth Fund (PGF) will be investing $19.5m in the form of a loan to support the Invercargill city centre's redevelopment plans.

Regional Economic Development Minister Shane Jones made the announcement today on the same day as Air New Zealand launched its new direct service between Auckland and Invercargill.

The loan is part of Invercargill’s $165 million project to redevelop an entire block in its city centre for retail, hospitality, office space and entertainment.

Today’s funding follows an initial investment of $995,000 in December towards a business case, feasibility study, concept designs and procurement strategies.

“The business case shows the project could boost Southland’s real GDP by around $48 million per year while creating more than 500 jobs during the construction phase and a further 300 retail and hospitality jobs once the redevelopment is complete,” Mr Jones said.

“These results would be an absolute game-changer for Invercargill and the wider region. With the help of the Provincial Growth Fund, the redevelopment is an opportunity to attract businesses and shoppers back to the central city and put vacant or abandoned buildings back into use."

Mr Jones said the redevelopment had been identified as a key project in the Southland Regional Development Strategy Action Plan, and is being led by key local players including the Invercargill City Council.

“It may be a small city at the bottom of the South Island but it’s one with a big vision. I’m pleased the PGF is able to help boost economic growth in the district and attract more people to our southernmost region. It’s a project with widespread support from the local community and one that the Government is proud to support,” Mr Jones said.