AMP's amber light for Young Street precinct at Sydney’s Circular Quay

AMP Capital Investors has had preliminary success in its plans for the $1.8 billion development of the Young Street precinct at Sydney’s Circular Quay.

The group has secured the backing of the City of Sydney for the planning changes that would revamp two blocks fronting Sydney harbour as a mixed-use precinct anchored by an overhaul of its Bridge Street headquarters into a $1 billion-plus premium grade office tower.

The plans will now head to the NSW state government for approval.

AMP Capital office and Industrial managing director Louise Mason said the opportunity was "unique," telling the Australian Financial Review, that AMP was optimistic about the prospects for the precinct.

The group wants to recast the Young and Loftus Street block as a diverse precinct of smaller mixed-use developments with an active laneway precinct.

These low to mid-rise buildings will be at the foot of the Bridge and Alfred Street block, where the group wants to transform the 1976 AMP Tower at 50 Bridge Street into a tower.

The city council approved AMP’s plans to transfer about 22,000 square metres of unrealised floor space from the low rise block to the rear tower block.

While leasing conditions are currently challenging, Ms Mason acknowledged that Sydney was not a “Singapore, London or New York” the city could use its physical attractions to compete.

“We have the elements,” she said.

With an international design competition to come next, the second stage development application process is not likely to be completed until 2015.

The AMP could seek partners for the hotel and residential components and to possibly fund its office tower.