Glamis Hospital, a former rest-home located in Montpellier St, Dunedin Central, and abandoned since 2011, has become a magnet for vandals, illegal dumping and rats.
Senior Station Officer Simon Smith, of Dunedin, said crews were called to a fire in the building about 1am yesterday.
Seven appliances and support vehicles — including an aerial appliance — and 30 firefighters battled the blaze.
"They've done a really good job of keeping it to the building and we've been able to put our aerial appliance to good use to stop the fire spreading outside the building," SSO Smith said.
It was listed for sale in September "as is, where is" after the death of its former owner, who had planned to convert it into student housing.
At a neighbouring property, Grant Meikle said he hoped any new owner would level the building.
His family had lived in their home for about 15 years, and yesterday was the third major fire they had seen at the site.
He was concerned any future blaze could spread.
"They must have been really having to scratch their heads about how to actually fight it ... they did a great job."Mr Meikle said vandalism at the site was near constant; it was unsafe, insecure and each subsequent incident made it more dangerous.
"Maybe about six months ago, there was a massive bang and one of the floors collapsed."
"Everyone's frustrated by it, but you just kind of get used to it after a while," he said.
"The people going through there ... we don't call the police unless we think it's kind of escalating or someone's in danger."
Selling the property was a start, he said.
A Fire and Emergency New Zealand spokesman said investigations were ongoing.
"Our fire investigator has liaised with our fire crews that were on scene, police and our fire investigator may return to the scene," he said.
Crews left the scene about 12.20pm.
"We did have quite an extended time this morning where we were trying to eliminate some hot spots up in the roof space where it was a bit hard for us to get to, just due to the damage to the building and the nature of where the fires were."
