South Australian Premier Mike Rann formally announced today in Los Angeles that the South Australian Film Corporation (SAFC) will move to a site in Adelaide, best known for housing psychiatric patients.

The site is in the south-east Adelaide suburb of Glenside and is being redeveloped for a range of uses including housing and retail services.

It will continue to have a crucial role in the state's mental health services but the grand old buildings, dating back to the 1800s and once used as asylums, will be a crucial part of the new film precinct.

$41m (A$43m) will be spent to replace the SAFC's shabby home at Hendon, on the other side of the city, with the cost covering significant heritage work and new facilities.

Included will be a 1,000 square metre and a 400 square metre sound stage, 1,000 square metres of set construction space and other production facilities, post-production facilities including mixing and editing rooms, and a theatre.

Many commercial companies are already on that side of the city and some are expected to move to the planned film hub. Other arts and educational tenants are also likely to be part of Glenside. Construction is expected to begin next year and be completed by December 2010.

'This is a tremendous time for our local film industry,' said Rann from the US, where he and SAFC chief executive Richard Harris are selling the benefits of filmmaking in their state. 'This year, SA already has five feature films in various states of production.

There has been a resurgence in feature film production here in South Australia in recent years as well as strong growth in post-production and digital effects activity with South Australian creative talent making significant contributions to Hollywood blockbusters such as Lord of the Rings, Harry Potter and Superman Returns.

South Australia is much less populous than the three states on Australia's eastern seaboard and sells itself as a cost-effective centre for independent production. These new facilities will be nowhere near the scale of the major studios that exist in Melbourne, Sydney and in the south-east corner of Queensland.

One of South Australia's advantages, however, is Rann's personal interest and commitment to film and filmmaking. The Adelaide Film Festival was his initiative and its seed funding of new productions has lead the way for other states.

'According to the latest figures, the film and television industry in SA contributes about $26.5m (A$28m) annually to the economy and employs about 1,000 people,' said Rann.

In the past four years, 26 features have been made in South Australia, he said, including Ten Canoes, Look Both Ways, Lucky Miles and Boxing Day. The target is to produce an average of six major films every year by 2014.