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It will be on university-owned land on the corner of Albany and Forth St - which formally housed the Albany St recording studio - and is scheduled to be operational for the 2023 academic year.
The name Te Rangi Hiroa and that residential college's identity will transfer to the new facility.
"The existing 125-bed college may close at the end of 2022 to make way for the new Dunedin Hospital or may continue as residential accommodation for a period depending on the progress of the hospital project," the statement said.
The college will be on seven levels over four wings and will include 125 ensuite rooms, professional college staff accommodation, reception and offices, dining hall and kitchen, and multi-functional communal spaces.
The total estimate for design, construction, furnishings and overheads is in the order of $90m.
Descendants of Te Rangi Hiroa (Sir Peter Buck), the university's first Māori graduate, gifted the use of his name for the existing college which opened in 2014.
The new college will incorporate input from Te Rangi Hiroa’s Ngāti Mutunga iwi and local Ngāi Tahu throughout the design process.
As part of the University of Otago’s ongoing sustainability agenda, the new college is intended to achieve a NZ Green Building Council 5-star Green Star rating (NZ Excellence) for the building, encompassing energy efficiency, innovation and sustainability.
The new college will be built on the site of the university’s Albany St recording studio which is to be demolished early next year.