The Solomon Islands Festival of Pacific Arts 2012 board has signed a memorandum of understanding that will lead to the start of work for a festival village in Honiara.
The agreement was signed between the board and the Solomon Islands College of Higher Education.
The college has agreed to let the festival village be built on its land.
The chairman of the board of the festival, Sir George Lepping said the signing was a milestone that would see the beginning of the work.
He also said MOU was the end of a few months of negotiation.
Last week, reports from Solomon Islands said there were concerns that preparations for the festival had yet to get off the ground.