It has bought the remaining 9ha of prime land to add to its holding of 5.1ha which was transferred to council ownership in 2010.
It has three category 1 heritage buildings on it.
Council chief executive Hamish Dobbie says the council was fortunate to work with Te Runanga o Kaikoura and Ngai Tahu to secure the southern end of the site.
"The crown had signalled its desire to sell the site.
"The iwi had first right to purchase the property, but worked through a process with council enabling us to purchase it instead.
"This ensures it remains in public ownership," he says.
Dobbie says the purchase is worth celebrating.
"This is 9 hectares of prime land in the centre of one of Hurunui’s strategic tourism destinations, Hanmer Springs.
"Having ownership now enables us to control its future, and ensure any future development adds to the character of the village, and enhances the area's social, cultural, environmental and economic well-being."
We are extremely grateful to Ngai Tahu Property and Te Runanga o Kaikoura for giving us this opportunity.
"It is a great outcome for the community."
The new site includes a sizeable hospital building, four uninhabited houses, workshops and storage buildings, along with auxiliary service buildings.
Dobbie says they are all in various states of disrepair, and have no heritage protections.
Their future is likely to be decided as the council develops a commercial master plan for the site.
"This plan will, in time, allow for the careful development of commercial and residential activities and reserves on the site.
"We’ll work carefully to ensure any development fits with the Queen Mary Hospital Heritage Reserve and Hanmer Springs Thermal Pools and Spa which sit adjacent to the site.
"Having this land in council ownership gives us an exciting opportunity to further enhance Hanmer Springs' appeal to both residents and visitors.
"It’s a special site, and I’m in no doubt we can do something noteworthy with it that future generations will thank us for," Dobbie says.
The council has already announced plans for one of the three heritage buildings on its existing site.
It plans to strengthen the Soldiers' Block and create a community centre, function space and Ngati Kuri meeting house.
A future phase will see a world-class museum created to tell the wartime and medical stories of the building.
Work on the first phase is due to begin before the end of the year.
"The meeting house or wharenui will showcase many artworks by iwi artists, and give Ngati Kuri a permanent presence in Hanmer Springs.
"We are excited by that, by this outcome and the opportunity to work together in the future," Dobbie says.
Queen Mary Hospital in Hanmer Springs sits next to the village's famous mineral-filled natural thermal springs.
Its Soldiers' Block was built in 1916 to care for returning soldiers suffering shell shock and other war-related neuroses.
More than 1100 soldiers were treated in the high-quality facilities.
They often made remarkable recoveries, with bathing in the waters a core part of their treatment programme.
The Soldiers' Block was one of only two such hospitals in New Zealand and the only one that remains on its original location.
The hospital later became a treatment centre for those with functional nervous disorders, and later an internationally-recognised facility for the treatment of drug and alcohol dependencies up until 2003.
The ownership of 5.1 ha of the Queen Mary Hospital was passed from the Canterbury District Health Board to the Department of Conservation in 2008.
It was vested to the Hurunui District Council as a historic and recreational reserve in 2010 which is treasured by villagers and visitors alike.
