Inspired by the arrival of the V&A design museum, the £20m Design and Innovation Quarter will include studio, workshop, retail and living space for the creative industries, with the aim of retaining graduate talent in the city.

Under the plans by developer Our Enterprise, the proposed facility on plot 2 of the central Waterfront area will form one side of a new city square next to the Malmaison hotel, railway station and V&A site.

Our Enterprise founder and chief executive, Matthew Bell, said: “We are a young, innovative development and regeneration company with a difference.

“We care about delivering projects with a social return and the highest levels of economic and environmental sustainability.

“Dundee’s vision for the waterfront is a perfect match for us and we are thrilled to bring our investment, energy and drive to this ground-breaking project.”

Two new city blocks, designed by architects HTA Design LLP, will include three main elements.

On the ground floor of both blocks will be “design, make and sell” units, attracting creative businesses to showcase the best of Scottish design.

Secondly, above the new ‘Hub’ for start-up businesses will be an apartment development geared to providing high quality city-centre living.

The development will include 91 apartments and 10,750 sq ft of ground floor commercial units.

Developers hope that these rented apartments will create a new urban community, offering light, modern apartments with the bonus of shared facilities such as large dining areas for social evenings with larger groups.

Executive director of city development, Mike Galloway, said he was excited with the plans and added: “I am looking forward to working with Our Enterprise on this hugely important development for the city.”

Our Enterprise and the city council will develop the proposals and planning application over the next few months.