The IRT Group intends to expand its Illawarra aged-care facilities after acquiring 16 hectares next to its William Beach Gardens facility in Kanahooka.
Chief executive Nieves Murray said the company planned to build 160 independent living villas on the new site.
"William Beach Gardens already has 160 residential aged-care suites and 60 independent living villas," she said.
"Our intention for the new site is to extend the independent living part of the village and create a larger community, with a specific focus on affordable living."
Detailed plans for the project have not yet been drawn up, but Ms Murray said the development would proceed in stages.
"Our intention is to do a staged development based on demand - as we gauge demand, we will build more of the villas," she said.
"We are anticipating master planning will start early in the new year and are hoping 2014 will at least see us submit a development application and hopefully get started soon after that."
While it was too early to say how many jobs the project would generate, Ms Murray said the rapidly expanding aged-care sector was an important source of jobs for the Illawarra, particularly with other industries in decline.
"Not only does it attract people to the area, more importantly it's providing opportunities for people to retrain," she said.
"We've had a number of people over the last year or so who have been made redundant, through the mining and steel industries in particular, who have retrained into care careers through IRT College."
The Illawarra's aged population is forecast to grow rapidly over the next decade, and IRT's expansion is just one of several recent developments for the aged-care sector.
Last week, IRT won Restart Illawarra funding for a development to house elderly parents and their intellectually disabled children, to be built on its existing William Beach Gardens property.
Restart Illawarra will also fund an aged-care centre at Kiama Hospital, a centre of excellence for aged care at Bulli Hospital, and a Warrigal Care aged-care facility at Shell Cove.
Ms Murray said the Illawarra was "a hothouse for innovation in the sector".
"One of the things we do particularly well in the Illawarra is innovate and a case in point is the project at William Beach Gardens where we are testing a brand-new model for ageing parents with intellectually disabled children.
"This is something that hasn't been done before in Australia."