"We are selling two-bedroom townhouses for $600,000- $700,000," he said.
But the Education Ministry has forced at least a delay in the scheme, saying it is reviewing all school needs.
Tenants in 40 state houses that would go to make way for the new housing in nearby Tobruk Rd are also worried.
Sharlene Barrett, who has lived there for 20 years, does not want to move. "I'm worried about congestion and overpopulation," she said.
The proposal follows a Government decision in April to give the area's 2800 state houses to the company.
Housing NZ Minister Bill English has said there is space to build 7500 homes on the state land, with "at least as many social houses in Tamaki as the 2800 there now".
Company corporate affairs manager Peter Fa'afiu said the new proposal would include at least 40 new state houses to replace the existing 40.
He said there could be 100 new homes on the sites of those 40, plus up to 50 more on the school site.
School principal Diane Hankins said her roll had grown in 12 years from 87 to 250, reflecting population growth and more children diagnosed on the autistic spectrum. The school wanted to keep enough land for three fenced fields.
Education Ministry head of education infrastructure Kim Shannon said the ministry was considering "options to expand and possibly rebuild Sommerville" as part of a broader review. "We do not anticipate making a final decision on this within the next year."
Mr Dryden said his firm had agreed with Housing NZ to sell 39 of its 300 new homes below $550,000, including five for disabled housing provider Accessible Properties and 34 where criteria for buyers would include connections with Glen Innes and jobs in emergency services, health or education. They would be one- or two-bedroom homes.
Manukau real estate agent Michael Black, who sold bare sections at Beachlands in May for $460,000, said buyers would not mind being next to state houses.
"It's only a matter of time," he said. "Look at Orakei. At one stage that was all state houses, now it's all multi-million-dollar stuff."