The latest plans for the site include a supermarket, multiplex cinema, department store, fashion precinct and creche.
Construction on the $125 millon development owned by Queenstown Gateway could begin as soon as early next year.
Prominent Southland businessman Acton Smith, who owns a department store and Mitre 10 franchise in Remarkables Park, which will neighbour Five Mile, yesterday said he was left shaking his head at the plans.
"Plans for 38,000 square metres of retail space are more than Invercargill and almost as much as the Sylvia Park mall in Auckland. Both centres clearly have much larger populations than Queenstown, and I really question whether the town can financially support all the businesses that are planned."
Another retailer yesterday said Queenstown could not support such development.
"They're dreaming," he said.
"Retailing is not easy, and the measured growth Queenstown has sustained up until now has been in line with its population growth. Queenstown doesn't want or need another white elephant, and there's a real risk we could have a larger, above-ground version of Hendo's Hole if this goes a-head."
Former owner of the NZ Shred and True Grit retail stores Jeff Hylton said Five Mile could suck the life out of Queenstown's central business district.
"Only the developers want Five Mile to go ahead. We've got plenty of everything in Queenstown, and also have some empty shops, which is an indication we might actually have more than we need," Mr Hylton said.
However, Five Mile developer Tony Gapes yesterday said the numbers stacked up on Queenstown being able to support another large shopping precinct.
"All the demographic studies we have undertaken support a lot more retail than we are putting into the area," he said.
"This has been confirmed by the level of interest that we have had from retailers who have undertaken their own studies and come to the conclusion that there is demand for their products."
Mr Gapes refuted comments the new Five Mile development would "overdevelop" the resort.
"We looked at the total regional population of 51,000, and have not taken into account the huge numbers of tourists and massive growth in this market."
Statistics New Zealand estimates the Queenstown Lakes district will have the highest growth rate in the country by 2031. Queenstown itself is expected to drastically boost its 2006 population of 24,100 to 41,700 in that period.
It was envisioned Five Mile would service the local community and central Queenstown would become even more of an entertainment precinct catering primarily for the tourist market, Mr Gapes said.
Remarkables Park developer Alastair Porter yesterday said although the company had in previous years opposed plan changes to create a special development zone in the Five Mile area, there was now a firm focus on growing Remarkables Park in line with Queenstown's actual growth patterns.
"We don't want to knock what other people are up to or have plans to do, and are concentrating on delivering quality development to Queenstown in a way that is good for the long-term growth of the town."