The 1.5ha property, which has frontages on to Clyde, Albany and Forth Sts, will be home to the new Otago Institute of Design, a joint venture between the university and the Otago Polytechnic.
The land sits on the southern edge of the university's main campus and is only a few minutes' walk from the polytechnic campus.
The Institute of Design building will house about 800 students and more than 100 design and design research staff from both the polytechnic and university, along with product development facilities, which will be available for use by local, national and international companies.
It was expected the Institute of Design would occupy about 20% of the site, university chief operating officer John Patrick said in a statement yesterday.
The Otago Daily Times has already reported a three-storeyed building is likely to be built on the site, with the Institute of Design occupying one floor.
The polytechnic has received government funding of $12.5 million to fund its contribution to the project.
No decision had been made on the long-term use of the remainder of the land, Mr Patrick said.
In the meantime, the buildings were being used as storage space and the land for university staff car parking.
The land was owned by Wickliffe until 2003, when it was purchased by the Dunedin City City and leased to Wickliffe for five years to allow the company to buy another building in Mosgiel.
It is likely the council made a profit on the deal, but council finance and corporate support general manager Athol Stephens would not comment when contacted this week.
He said the council had not purchased the site with the intention of making money, but with the intention of offering support to a Dunedin company which needed to release capital to enable it to expand.
The site's location on the edge of the university campus meant it was the type of property "the council was probably never going to lose money on", he said.
The council and the university have also nearly concluded another land deal.
The university had so far paid $5.34 million on account towards its purchase of land next to the proposed Otago Stadium at Awatea St, near Logan Park, Mr Stephens said.
A fourth payment on October 31 next year would bring the university's total contributions on account to $5.6 million.
The final contribution level was subject to agreement on land value and an exact determination of the amount of land required by the university.
The university announced last month its plans for the stadium site were to construct a 13,400sq m building which could house facilities such as a new Unipol gymnasium, the Foundation Studies department, Student Health services, a pharmacy, a cafe, a child-care centre and some research offices.
