Dunedin's Chamber of Commerce says the rest of the city needs to lift its game to match the growth of Otago University.
The university is spend $650 million on new buildings over 15 years.
The Priority Development Plan of 23 major projects includes new centres for humanities and the performing arts and a new aquarium.
The chief executive of the Otago Chamber of Commerce, John Christie, says the plan will change the face of large parts of the central city.
He says it should also challenge other parts of the community to find different growth opportunities.
Otago University said when it announced the plan on Friday, that big injection of capital would will change the look of its main campus in Dunedin, but also those in Christchurch and Wellington.
The highest priority was being given to the complete refurbishment of New Zealand's only dental school, at a cost of at least $50 million within five years.
Other buildings include new centres for humanities and the performing arts, upgraded science buildings and a new aquarium, likely to be in the centre city.
Building companies had been shifting resources north to earthquake-hit Christchurch and its rebuild. But Otago Chamber of Commerce chief executive John Christie believes the plan will do far more than just help keep construction companies from leaving the Dunedin.
"The university's a significant player anyway in our city, but to have a construction programme such as this will change the way the city looks and feels.
"It will provide, I think, some of the best teaching facilities we'll see in the country, and that's got to be an attraction for future students, which is again another significant benefit for our city."
Otago University's chief operating officer John Patrick says the plan will help business to plan ahead.
"There's a lot of construction capability that has been moved to Christchurch, and so we wanted the construction industry to understand what we were planning so that they knew and we would really like them to get involved."
Mr Patrick said the building plan should also give certainty to the university's own departments about their new facilities to come.
Otago University Students' Association's president Ruby Sycamore-Smith said there are areas of the university that need a facelift and she welcomes the plan, but it can't come at the cost of student support.
The university said it may do some borrowing to fund the plan, but it would not need to borrow a lot.