The long-derelict former rest-home, at 28 Montpellier St, has been bought by Dunedin developer Blue Sky Property Group after being listed in September.
Director Lyndon Fairbairn confirmed Blue Sky officially signed off the purchase on Friday.
No major plans had been cemented yet, but the group was looking to develop the 1444sqm site into a handful of three-bedroom homes.
"Priority number one is to secure the site and get it down from the neighbourhood.
"I know the neighbours will be over the moon and overjoyed to actually have the building removed."
Abandoned since 2011, the derelict building has become a magnet for vandals, illegal dumping and rats.
It has severely deteriorated over the years, especially after two suspicious fires which gutted it in 2017 and 2018.
Mr Fairbairn said the most recent blaze, which firefighters spent close to 12 hours suppressing last month — after the property was listed — had "totally gutted the place".
"We had a look before the fire and it was just totally gone. There’s no way you could actually rejuvenate it.
"But after this fire, it’s crumbling."
The neighbourhood had also been putting up with parties, out of control youth, graffiti, fires and rats for close to 15 years, he said.
"Someone was setting possum traps the other day in the building.
"It’s just a dilapidated building."
He had already informed the neighbours about the sale, one of whom was "just overjoyed".
Mr Fairbairn — who is also a director of real estate company NZ Property Solutions, which sold the building — said he had heard there was national interest in the site.
The cost to demolish and remove the building had scared off a lot of other developers.
But once it was gone, the cleared site would be "A-grade" property.
"We’ve set aside a substantial sum of money to remove the building.
"It’s going to be a massive cost."
Blue Sky Property Group would take ownership of the building in February, but would try to have it demolished sooner, he said.
A Fire and Emergency New Zealand spokesperson said Fenz was pleased the site of the former hospital would now be utilised "positively".
Most derelict buildings did not have fire safety systems and had been vandalised to the point where people illegally occupying the building were at risk.
"It also makes it dangerous for firefighters who often have to first search a derelict building on fire for occupants before being able to effectively tackle the fire."
