UEFA initially wanted City vs Madrid, alongside the three other ties which require concluding, played in Lisbon to avoid health and quarantine concerns related to Covid-19.
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City wanted to preserve their home advantage, while Real Madrid were keen for it to go ahead in Portugal.
But the relaxation of quarantining rules in the UK means City has allowed for the game to be played at the Etihad and the decision also applies to the Europa League last-16 games.
This means Juventus (vs Lyon), Barcelona (vs Napoli) and Bayern Munich (vs Chelsea) will also host their games behind closed doors next month. They are due to be played on Aug 7-8.

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UEFA said in an official statement: "The UEFA Executive Committee felt it prudent to conclude that UEFA matches should take place behind closed doors until further notice.
"This decision was made in agreement with the national associations and authorities of the 2019/20 UEFA Champions League, 2019/20 UEFA Europa League and 2019/20 UEFA Women’s Champions League final eight tournaments’ hosts Portugal, Germany and Spain.
"This restriction will also apply to the remaining matches in the 2019/20 UEFA Youth League."

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UEFA said the decision was "consistent with the principle of sporting fairness" and took into account the fact that all four home teams are currently playing domestic matches in their own stadiums.
However, UEFA added that it would monitor the situation and move matches to Portugal if "new events occur that would make it impossible to play one or more matches at the original venues."
The final stages of the Champions League, from the quarter-finals onwards, will be played as a mini-tournament in Portugal and the Europa League in Germany. All those matches will be over one leg.
UEFA confirmed that the two Europa League ties where the first leg did not take place - Inter Milan v Getafe and Sevilla v AS Roma - would be played over a single leg in Germany.
Additional reporting by Reuters.
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