However, the 21 year-old is highly regarded by Pep Guardiola and there was frustration at City before the start of last season when the Football Association declined to grant Douglas a work permit.
Luiz has never played for City and has been on loan with Girona for the last two seasons.
The Gers coach hailed the signing as fantastic business by Aston Villa and tipped his hat towards Smith for identifying and swooping in for Luiz.
ASTON VILLA are closing on a £15million deal for Manchester City midfielder Douglas Luiz, according to reports.
Smith seemed to have learned from Fulham's experience and he has made his dealings early rather than waiting for deadline day.
Unsurprisingly a number of those signings made in the madness of deadline day failed to impress, with club-record signing Andre-Frank Zambo Anguissa failing to justify his price tag.
The newly-promoted side have not been shy in the 2019 summer market as they look to fight off relegation.
The Midlands club have already completed permanent deals for Tyrone Mings, Kortney Hause and Anwar El Ghazi, the trio having impressed during the club's promotion campaign last season. His reported new contract will see him become among the club's highest earners.
"Ezri fits the profile of the type of player we were searching for", Smith said. "He's a high-potential player who I believe can step up to the Premier League and I'm really looking forward to working with him again".