He added that Gbagbo was holed up in the residence with heavy weapons and mercenaries.
Ouattara also urged his forces to restore order in the main city of Abidjan where roaming militia have been engaged in looting and random attacks in recent days. He said he had ordered the leaders of his security forces to take every measure to ensure maintaining order and the protection of property.
The order to his troops not to commit atrocities came after UN officials and aid agencies reported massacres in the west of the country which have been blamed on his forces.
The decision to seal off Gbagbo's private residence follows the failure by Ouattara's troops on Wednesday to storm his home which is guarded by some 200 men.
Meanwhile, the UN envoy to Côte d'Ivoire says Laurent Gbagbo will be taken alive and put on trial.
Ambassaor Youssoufou Bamba said there could be no more negotiations with Gbagbo after the failure of efforts this week to convince the longtime leader to stand down.
"Sooner or later he will be captured and brought to justice," Bamba told a press conference while insisting that Ouattara wants his rival taken alive.