Polytechnic chief executive Phil Ker confirmed talks were under way with a potential project partner from outside the city - which he would not yet name - to develop the venture.
The external partner could fund, construct and operate the facility, ''or any of those combinations'', and an announcement was expected within two months, he said.
If talks were successful, it was hoped construction could begin late next year and be completed in the last quarter of 2017, or early the following year, he said.
If a deal did not eventuate, the polytechnic would still seek to develop the project, he said.
Mr Ker's comments came after the Dunedin City Council last month launched public consultation on a proposal to sell a 0.6ha slice of Logan Park to the polytechnic.
The land was home to the former Bowls Dunedin clubrooms and a car park, and was already leased to the polytechnic, council group chief financial officer Grant McKenzie said.
The sale, if approved, would allow the hostel project to proceed, and came after Ngai Tahu pulled out of earlier plans to build a 235 room, $20million hall of residence on the site in late 2014.
Mr Ker said the size and cost of the planned development remained ''broadly similar'' to Ngai Tahu's earlier plans, which had envisaged supervised student living in five bedroom self contained apartments.
The designs had been tweaked to include studio and two bedroom apartments, to suit a wider range of student preferences, he said.
However, the target market remained an even split of domestic and international students, as the polytechnic sought to increase its numbers.
''The ability to reliably offer high quality student accommodation is vital to our ambitions to grow our national and especially our international student numbers, and contribute even more to Dunedin's community and economy.
''It's a significant project and it's one that is important to the polytechnic.
''We lose students now because we can't guarantee accommodation, and there's no doubt the lack of accommodation is a constraint on our international student recruitment efforts.''
The project would also boost Dunedin's construction sector, even if a partner from outside the city was involved, he said.
''They're not a construction company, so any work I would imagine a good chunk of it would end up going to city operators.''
Mr McKenzie said the proposed land sale was a one off deal designed to help the polytechnic, and not related to the council's sale of surplus land.
The council decided to support the project, rather than offering the site for sale on the open market, because of the economic benefits it would bring to the city, he said.
Although councillors had endorsed the sale, subject to public consultation, a sale price would not be disclosed until after the deal was confirmed.
