After years of speculation, the South Australian Government has revealed the old Royal Adelaide Hospital (RAH) site could be overhauled for a new research institution as well as tourism, cultural and residential precincts up to 17 storeys high.

It proposes to demolish the East Wing and return a third of the hospital's seven-hectare site in the city's east end to the Adelaide Botanic Gardens.

The development would also retain five heritage buildings and reuse them for a culture and tourism precinct, which will include a new five-star hotel, a North Terrace plaza, laneways and a European-style piazza.

SA Urban Development Minister Stephen Mullighan said the new development proposal was designed to keep the area vibrant at all hours.

"That requires people to work there during the day but we also want people visiting there into the weekends and into the evenings and having a hotel facility," he said.

"Having the opportunity for people to live on site will make sure the site is busy 24 hours a day, seven days a week."

A before and after artist impression of the Royal Adelaide Hospital site. ( Supplied: SA Government )

More than 1,000 apartments to be built

The Government said the development's residential precinct will include about 1,080 apartments, including 150 "affordable student dwellings" and 60 supported residential care dwellings.

Premier Jay Weatherill and Urban Development Minister Stephen Mullighan present the plans to media. ( ABC News: Candice Prosser )

It said the residential building could be up to 17 storeys high.

Botanic Lake will be doubled in size for stormwater retention as part of the development's garden quarter.

Its university and innovation quarter will involve multiple universities collaborating with other organisations.

Opposition Leader Steven Marshall said the development was a missed opportunity for South Australia.

"This is an exciting precinct for the people of South Australia, and what we're going to get, essentially, is a property development," he said.

"We think there's an opportunity, to build on the infrastructure that we've already got there, the medical infrastructure.

"We think we could have an international health precinct on that site, mixed use with an iconic cultural program for South Australia. Instead we've got a housing development."

"We're got a billion dollars of infrastructure on that site, that the Government wants to put a wrecking ball through."

Development will draw people to east end

Businesses on nearby Rundle Street had been concerned about reduced cafe and restaurant trade when the hospital closes ahead of the New RAH opening in the city's west end in 2017.

Premier Jay Weatherill said the development would draw people into the east end and breathe new life into the district.

He said that once complete, more than 9,300 people would work, visit or live in the precinct every day.

"We believe the proposal provided by the preferred proponent meets all of the expectations of the community and we look forward to revealing all of the details," Mr Weatherill said.

The Government said it was entering "exclusive negotiations with the preferred proponents", which was a consortium involving SA property group Commercial & General and the company John Holland.

The Government hopes to start work on the $1 billion development as soon as the hospital is vacated and said it would undertake a community engagement process to "ensure all South Australians have their say".

The full development is expected to take 15 years.