Thanks for responses.
Johnb81 – Unfortunately I don’t think XAMPP or WAMP are an option as a number of people need to remotely work with me on content and design, and wouldn’t be able to share the development process if I have it locally.
esmi – I’m not clear how this ensures that the search engine indexed pages are in the same location as the old website.
Basically the confusion for me isn’t how to develop the site in a subdirectory, but how to ensure the current website doesn’t lose its search engine ranking due to being in a new unindexed location.
Thanks