For a Sydney property developer, thin air could be more valuable than the plot of land beneath it.

As development and density reaches capacity in Sydney, purchasing the empty skies above heritage-listed sites remains one of the few avenues for developers to outgrow planning controls.

Key points: The City of Sydney sells heritage floor space to private developers to fund building conservation efforts

The City of Sydney sells heritage floor space to private developers to fund building conservation efforts Air rights refers to space above a building, which can be developed or transferred for off-site development

Air rights refers to space above a building, which can be developed or transferred for off-site development The Greens said the heritage purchase was a means for developers to circumvent NSW planning control laws

Yesterday, the City of Sydney council and Sydney Living Museum celebrated the $20 million sale of "air rights" to the 200-year-old heritage-listed Hyde Park Barracks near NSW Parliament House.

Private developers, including Lendlease which owns Quay Tower, purchased more than 12,000 square metres of the barracks' heritage space for up to $1,500 per square metre.

The City of Sydney is hoping to sell off another remaining 38,000 square metres of heritage space — which includes Qantas House in Hunter Street — and use the revenue to fund the conservation of the historical sites.

The Hyde Park Barracks was placed on the UNESCO World Heritage list in 2010. ( ABC TV )

Such a purchase allows developers to bank the space reserved for the heritage sites, where development is forbidden, to expand properties elsewhere.

A City of Sydney spokesperson said the award scheme, introduced in 2015, was an "incentive for conserving and maintaining heritage buildings" and cited similar initiatives in New York City.

Notably, a developer was required to purchase 2,398 square metres of heritage space before they could win the rights to develop Wynyard Station in 2017, a 10 storey-site which tendered for more than $1.8 billion.

Planning Law Solutions director Michael Mantei said transferring air rights was mostly unheard of in Australia outside of Sydney.

"You could lawfully circumvent those height controls and the planning controls if you're using the heritage floor space," he said.

For a developer, a $20 million purchase of what is essentially air is worth more than the price tag.

In New York City, now-US President Donald Trump legally stockpiled air rights from at least seven low-rise properties surrounding Trump World Tower, ensuring the views around it remained unimpeded.

While not quite the same scale as the skyscrapers in Manhattan, Queensland homeowners purchased their neighbour's air rights to preserve their pristine views of the Brisbane skyline.

"A planning approach would say the rich can't do whatever they want, a market approach says 'yes, you can'," said University of Sydney Professor of planning Nicole Gurran.

Professor Gurran said from her perspective the City of Sydney's scheme balanced the rigidity of NSW planning controls against the public interest.

"We know it's not a good idea to be completely inflexible, so what we have are very stringent rules for heritage items," she said.

"And then we have other people who are able to profit by being able to vary their rules, on other sites.

"It [the air rights] makes it a bit more fair and [the City of Sydney] varies those rules by making the landowner pay for that privilege."

However, the NSW Greens' David Shoebridge said the sale was a loophole for developers "buying their way into overdevelopment in Sydney".

"The 12,000 square metres of development yield that's sold from [the barracks] is going to turn up somewhere else in Sydney," he said.

A City of Sydney spokesperson said there were currently no other UNESCO-listed heritage buildings in Sydney whose floor space was being considered for sale.