Key Summary.
What’s being proposed. Two linked NSW Government rezoning proposals: Shellharbour City Centre and the Shellharbour Hospital Precinct
Combined new homes. Up to 11,700 (10,000 in the City Centre, 1,700 in the Hospital Precinct)
New jobs. Around 940 in the City Centre, plus a new allied health local centre in the Hospital Precinct
Building heights. 2 to 22 storeys in the City Centre, 2 to 7 storeys in the Hospital Precinct
Affordable housing. 10% (government land) and 5% (private land) in the City Centre, minimum 2% in the Hospital Precinct
New open space. 14.4 hectares in the City Centre
Have your say. By 5pm, 8 September 2026
Expected finalisation. Late 2026 or early 2027
Shellharbour is set to grow by almost 25,000 residents by 2041. To keep pace, the NSW Government has released a state-led rezoning proposal for Shellharbour City Centre, exhibited alongside a related proposal for land around the new Shellharbour Hospital. Together, the two proposals cover more than 180 hectares of the LGA’s most strategic land and could deliver close to 11,700 new homes over coming decades.
For builders, developers and landowners across the Illawarra, this is worth understanding in detail. It signals where government sees the region’s growth landing, what planning controls are likely to apply, and where the next wave of opportunity in Shellharbour will sit.
Shellharbour: A city centre built for up to 10,000 more homes.
The Shellharbour City Centre Rezoning Proposal was announced on 29 October 2025 under the State Significant Rezoning Policy. It covers roughly 109 hectares straddling New Lake Entrance Road and Lake Entrance Road, forming the urban core of the LGA. Around half of this land is government owned, including Shellharbour TAFE, Shellharbour Public Hospital, social housing managed by Homes NSW and the Aboriginal Housing Office, and Council land used for civic purposes and parking.
The proposal is designed to be implemented through a self-repealing State Environmental Planning Policy that will amend the Shellharbour Local Environmental Plan 2013. Once the new Shellharbour Hospital opens, the current hospital site is expected to become available for redevelopment, which is one of the key opportunities driving this proposal.
The table below sets out the headline figures.
What’s changing on the ground.
Regional context map
The rezoning introduces a new R4 High Density Residential zone and extends the E2 Commercial Centre zone west to Stoney Range, recognising the precinct’s role as a major regional centre. R2 and R3 zones are retained further from the core to provide a transition into surrounding neighbourhoods, while SP2 Infrastructure and RE1 Public Recreation zones protect land needed for TAFE, the hospital, roads, stormwater and open space.
Proposed land zoning map.
Proposed height of buildings map
A minimum subdivision lot size of 900 square metres is proposed for land rezoned to R3 in the west of the precinct, encouraging the lot consolidation needed for residential flat buildings. Active street frontage requirements are also proposed to extend along Remembrance Place and Minga Avenue, building on existing activation along Benson Avenue and Lamerton Crescent.
Six key sites across the precinct come with incentivised infrastructure requirements, ranging from road widening along Benson Avenue and College Avenue to the delivery of Benson Basin, which is designed to serve a dual role as stormwater infrastructure and public open space. A new bus interchange is also proposed for College Avenue, along with a pedestrian footbridge over Lake Entrance Road, to improve public transport, walking and cycling connections across the centre.
Supporting studies also point to intersection widening at Range Road and New Lake Entrance Road, to support the additional traffic these homes and jobs will generate.
Infrastructure delivery will be funded through a mix of local council contributions under sections 7.11 and 7.12 of the Environmental Planning and Assessment Act, and the state’s Housing and Productivity Contribution, which funds regional infrastructure such as schools, hospitals and transport across the Illawarra Shoalhaven. A new pathway for State Significant Development will also apply to large housing projects with a capital investment value of $60 million or more, giving eligible projects a more streamlined assessment route.
A companion proposal for the Shellharbour Hospital Precinct.
Exhibited at the same time is a separate rezoning proposal covering six key sites around the new Shellharbour Hospital, which is currently under construction with more than $780 million committed by the NSW and Commonwealth Governments. This proposal takes a similar approach: freeing up land close to new health infrastructure and the Shellharbour Junction train station to deliver housing, jobs and services.
The proposal seeks to facilitate up to 1,700 new homes, including a minimum 2% affordable housing contribution on private land, along with a new local centre focused on allied health services next to the hospital. Building heights are proposed between two and seven storeys, with floor space ratios of up to 1.6:1, and a minimum of 17,000 square metres of non-residential floor space is required in the new local centre to support a genuine mix of retail, health and commercial uses rather than housing alone.
Why these proposals matter for developers and builders.
Both proposals are still in draft form, which means the planning controls that ultimately apply, including zoning, height, floor space ratio and minimum lot size, could shift in response to submissions before the changes are finalised. That makes now the right time for anyone with land, or an interest in land, across these precincts to understand exactly how the proposed controls would apply to their site and what they would mean for development yield and feasibility.
The scale of government-owned land involved, combined with new transport, open space and stormwater infrastructure, also points to a broader shift in how this part of Shellharbour will function. Sites that are marginal or underutilised under current controls may look very different under the proposed zoning, height and floor space ratio maps.
Have your say before 5pm, 8 September 2026.
Submissions on both proposals close at 5pm on 8 September 2026. The Department of Planning, Housing and Infrastructure is also hosting two community information sessions where representatives will be available to answer questions, with free tickets available through Humanitix. Once submissions close, the Department will prepare a finalisation report, and if approved by the Minister for Planning and Public Spaces, the changes are expected to come into force in late 2026 or early 2027.
What this means for your next project.
Our town planning team is reviewing both Explanations of Intended Effect in detail and can help you work through what these changes mean for a specific site, whether that’s understanding development yield under the proposed controls, preparing a submission, or planning ahead for when the new provisions take effect.
Get in touch with the Allen Price team to talk through how the Shellharbour rezoning proposals could shape your next project.
