The cost of revamping Sydney’s flagship cultural precinct at Walsh Bay has climbed to $371.3 million, almost triple its original estimate, as the state government has conceded taxpayers will also make a contribution towards the costs of reopening of the Theatre Royal, closed since 2016.

In August last year, Arts Minister Don Harwin told the upper house he did not anticipate "there will be any cost to the taxpayer from the Theatre Royal development". "That is the beauty of the project," the minister said then.

Construction hoardings surround the 1100 seat Theatre Royal. Credit:Steven Siewert

But Mr Harwin told a budget estimates hearing this week that taxpayers would need to make some contribution after the government signed a 55-year-old lease agreement with building owner Dexus in November.

"You can take it as ... because we're leasing it that obviously there is a contribution," Mr Harwin said, indicating the question would be more appropriately answered at the end of the competition tender process to find a new operator.