Arvia apartments, on the corner of Watt Street and Shortland Esplanade, is thought to be the first residential block in Newcastle that will have a car share scheme when it opens in mid-2011.

The 99-apartment development will have 56 parking spots.

Newcastle City Council initially found a deficiency of 15 spaces, but approved the development with the two-vehicle car pool scheme a condition of consent.

Objectors cited the lack of on-site parking as one of their main problems with the proposal.

Developer Keith Stronach, who has acquired the first of two Smart cars for the development, said his daughter Cassie, a Sydney architect, came up with the idea.

"We were trying to find a clever way . . . to deal with the shortage of parking spaces," Mr Stronach said.

The body corporate will manage booking and hire.

Mr Stronach said residents who worked in the city or students using public transport would not need a full-time vehicle.

"It's a lot cheaper than owning a car," he said.

Hunter Commuter Council secretary and Newcastle councillor Graham Boyd said the system sounded feasible.

"It was good to see a developer taking some responsibility to try and offset the lack of car parking spaces for the residents," he said.