A buzzard soars above wildflower meadows glinting with buttercups, as a giant construction vehicle whirs across a concrete pad where a new Tesco and a market hall are under construction.

The development could be seen as a vote of confidence in a great British tradition. The Prince of Wales this week cured his hangover after Aston Villa’s Europa League win by checking out building work on what could be the UK’s newest high street, in Nansledan, Cornwall.

Prince William’s father, King Charles, kicked off the project’s construction in 2014, in a suburb on the edge of Newquay, on the north coast of the county, renowned as the home of British surfing.

Inspired by the trendy rejuvenation of market halls into dining destinations packed with independent startups, notably one in Altrincham, Great Manchester, the project has been carefully designed as space for small businesses to thrive alongside more affordable services such as the Tesco store.

Against the backdrop of a decades-long debate over the future of Britain’s high streets, Nansledan might be seen to offer an inspiring new model – but there are concerns that it could damage the ageing shopping street in the centre of nearby Newquay.

The candy-coloured homes may look a bit twee – “It’s a bit like The Truman Show,” whispers one Newquay resident and regular visitor to Nansledan – but the development includes affordable homes, which make up 30% of the new housing, from shared ownership to more than 100 much-needed low-cost rentals.

The prince’s visit this week came days after he confirmed plans to sell 20% of the Duchy of Cornwall’s property over the next decade, and promised to invest £500m in community and nature projects across his estates.

The Duchy of Cornwall, William’s inherited estates, brings him a private income of more than £20m a year, and the Nansledan development will bring in money through rent and sales of homes.

Sam Kirkness, executive director of development at the Duchy, describes the aim for Nansledan as “a walkable, mixed use, healthy community where they [are] able to support jobs as well as homes”.

Already home to more than 2,000 people in about 900 houses and flats inspired by traditional Cornish and art deco architecture, the development will eventually have 3,700 new homes, including 24 for local people experiencing homelessness.

Holiday rentals are banned, against the backdrop of a crisis in affordable housing in the region. The new town already has a primary school and a number of small businesses and can be accessed by bus and the Beryl bike hire scheme, which operates in Newquay, as well as by car and a slightly distant train station.

The small town is cut through with parks and has made room for nature across 300 acres of green space, including a wildflower meadow.

Kirkness says the development is not just a commercial enterprise but “about a living, working community where employment and social connection are at the very fabric of all of our decisions”.

There’s certainly a buzzing community vibe in Sabzi deli, where local people – from young mothers and families to older dog walkers and well-heeled couples – are all mixing at lunchtime.

Upstairs, web agency Solve Media, which employs 20 people, is like an outpost of east London in rural Cornwall, with trendy mid-century furniture and banks of computer screens. Next door there is a clothing boutique and a jewellery store and up the road a pottery studio, which gives classes, as well as more coffee shops.

Kirkness says the Duchy aims to keep ownership of at least half the high street so that it can support businesses through good and bad times, helping them expand or move into smaller spaces if necessary to keep a “thriving commercial and social” heart to the town.

Local people appear divided over whether Nansledan is bringing new hope, visitors and a blueprint for the government’s new towns in England – or is just a parasitic neighbour sucking badly needed investment from flagging neighbouring town.

Vicky Mills, who works in the haberdashery and gift shop Spalls Of Newquay, says she doesn’t think Newquay will suffer from competition with Nansledan. She questions whether it has anything to steal shoppers away. “Who’s going to go to Nansledan to buy a diamond or a bit of expensive jewellery?” she asks.

However, Mills says Newquay’s town needs more variety of retailers with less focus on charity and coffee shops, and more affordable clothing and footwear. After the closure of M&Co, only Peacocks survives in that vein amid pressure on household spending and heavy competition from online retailers.

“I’ve been here 17 years and I have seen massive decline from when I started,” she says.

Her colleague, Sharon, is vehemently opposed to Nansledan, which she sees as funnelling investment away from the older town. “They need to invest in Newquay,” she says. “If I wasn’t working here would I bother coming in? Probably not.”

She fears Nansledan will take even more trade away from the already struggling older neighbour. “They are killing it,” she says, blaming the local authority.

Ollie Bicknell, the owner of the OJA garage nearby, agrees there is “a lack of things to entice people into town. All they are getting is charity shops. They should be spending money in town not out of town.”

One Newquay resident says she feels sad about the Nansledan development spreading into the green spaces many came to Cornwall to enjoy. “The royals, they are making millions out there,” she adds.

Last year, the chancellor, Rachel Reeves, said Cornwall had been “neglected by successive governments” as she pledged investment and eased licensing rules.

One shopkeeper in Nansledan says they chose to be based there as many of the shops in Newquay are old and in need of refurbishment. They also had concerns about security at night and the hectic nature of Newquay’s high street during the summer.

Others are worried about empty shops in Newquay, such as the closed Poundland and Original Factory Shop, the availability and cost of parking, and public transport.

Homelessness is another issue. Poncho, a busker based in a tent on Newquay’s high street after living rough in Cornwall for five years, sums up life in a seasonal coastal town : “It’s tough. With some perseverance you can get work in the summer but if you are on minimum wage here it is a hard town to survive in and when winter hits, unless you have got support. It turns into a ghost town.”

The council has improved parts of the high street with more greenery and paving and has plans for improved lighting and an events space. It has put in cycle lanes, some hire bikes, and a summer night bus to improve transport.

It has also tried to overcome the town’s 1990s image as a destination for rowdy hen and stag dos by shifting away from bars and clubs towards cafes. But local people say Newquay is now too focused on daytime activity, with little to do in the evening. Many cafes are closed by 4pm.

Poncho says Newquay should broaden its appeal in the evening with “more of an old-school holiday feel, with more restaurants for families with friendly waiting staff rather than order on your Apple phone”.

“We’ve lost that culture,” he adds.

On that, he is in agreement with Jackie Wright, who is on holiday in Newquay.

Wright likes the high street, which she sees as “vibrant, unlike most”. She says Newquay should try to retain some of its “old worldy” charm. Which is a precious asset Nansledan is also trying to create, albeit from scratch.