Kāinga Ora regional director Kerrie Young confirmed moves to sell the Aaron Lodge site yesterday.
Mr Radich had previously promoted the site as a possible solution to the city’s homelessness issues, but yesterday told the Otago Daily Times he accepted this would not happen.
There were no plans for the council to buy the site.
"Our plan was all based around Kāinga Ora continuing to own the site and we would co-ordinate among the social service agencies.
"So the idea was certainly not that we, as council, buy it and come up with a grandiose plan."
It was a shame they could not get "something over the line, despite the best will in the world", Mr Radich said.
"There was a range of different approaches and a range of different ways of looking at it.
"But the very starting point was to provide emergency housing ... and the government’s not keen on having emergency housing in motels."
"It’s a decent sized chunk of land in the middle of Kaikorai Valley Rd."
The park was bought by Kāinga Ora for more than $4 million about four years ago.
After being used as a supported isolation and quarantine facility, it has remained empty, gathering weeds and leaving the public wondering about its future.
Housing Minister Chris Bishop rejected Mr Radich’s idea in July last year, saying the building lacked "local services required for a cohort of individuals with complex needs".
The buildings also did not comply with fulltime residential occupation requirements, and extensive upgrades would be needed to bring them up to standard, he said.
Yesterday, Ms Young said developing the site to provide social housing was "no longer financially viable".
"Since purchasing the property with the intention to provide social housing on the site, we have explored multiple options and layout plans.
"However, the cost of building homes has risen dramatically over the past few years and the economic environment and property market are now markedly different. Naturally, that impacts on our budgets."
A real estate agent had been engaged to list the site and from there any interested parties could engage with the sale process via the agent and undertake their own due diligence.
Otago Housing Alliance strategic lead Aaron Hawkins said he would love to see the community take ownership of the land.
"Community housing providers are already meeting to discuss what a citywide approach might look like.
"This is as good an example as any to focus that conversation."
Kāinga Ora is in the midst of a major overhaul, after a review conducted by former prime minister Sir Bill English declared the organisation was neither financially sustainable nor delivering enough houses.
Ms Young said the organisation remained "committed to renewing our housing in Dunedin".
"Over the past three years Kāinga Ora has delivered 133 new state homes in the Dunedin area, with a further 49 homes either under construction or contracted for delivery by June 2025."
