The NSW government will sell off up to $200 million of valuable buildings around Sydney Harbour to fund a major redevelopment of Circular Quay.
Premier Mike Baird says Circular Quay is "run-down" and not befitting of the area that acts as "the gateway to our city".
To give it the facelift it deserves, assets run by the Sydney Harbour Foreshore Authority (SHFA) that are not of long-term strategic importance will be sold off.
Some of properties targeted for sale include Shangri-La and Four Seasons hotels in the Sydney CBD, as well as hotels in Darling Harbour and commercial offices at Darling Quarter.
Finance Minister Dominic Perrottet said the $200 million target would be easily met, but refused to say how much rent revenue the state would miss out on as a result of the sales.
"The view from the revenue side... is we're putting those funds into productive assets and getting a better return for the people of NSW," he told media on Monday.
Mr Baird said there was "limited revenue" and the question was more about whether the assets should be kept, or whether new buildings that lift the precinct to something vibrant and modern should be created.
"Do we want to have some idle assets on our balance sheet, or do we want to take that capital and put it into renewing this city?" he said.
The money will go towards upgrades to the ferry wharves as well as a revamp that could include new retail facilities.
But Opposition Leader Luke Foley demanded the government reveal how much rent revenue they would be missing out on.
"Ultimately, we need to be confident this won't end up being a fire sale of some of the most valuable real estate in Australia," he said in a statement on Monday.
"I wouldn't trust this lot not to whack up a load of flats on top of the wharves."
SHFA itself is also undergoing change.
A review has led the government to consolidate SHFA's functions to agencies including Government Property NSW and Destination NSW, while all staff have been transferred to the Department of Finance, Services and Innovation, according to a statement on Monday.
Circular Quay's makeover is expected to start in 2019.
