The Western Cape province will begin work on the site of the old Conradie Hospital in Pinelands in 2018.
Premier Helen Zille says the development will include "affordable housing" for thousands of residents who hardly afford rent or buying a house in the province.
The Conradie development would house at least 11 000 residents, and half of those would be "affordable housing'.
The affordable housing market is defined as households earning between R3 500 and R25 000 per month.
The City is working on two major projects, Helen Bowden Nursing Home in Green Point and the old Woodstock Hospital.
Services will be managed by an independent company which will ensure people pay their rentals and everyone abides by rules, and will ensure that we get a wonderful mixed income, cross subsidised development that works for everybody.— Helen Zille, Western Cape premier
We really want to make Cape Town available to people who work and make it run.— Helen Zille, Western Cape premier
Listen to the audio below for more details on province's housing plans...