Work is due to start on 500 homes at the BD1 billion ($2.65 billion) Northern Town within two months, Housing Minister Shaikh Ibrahim bin Khalifa Al Khalifa told members of parliament.

He said a contractor had been chosen to build the government houses at a cost of BD17 million by the Housing Ministry, while 1,500 would be built by the private sector - with the government footing the bill for those homes over the next 25 years.

Shaikh Ibrahim revealed negotiations were still underway with the private sector to build those homes, as well as 2,700 homes in Al Louzy, near Hamad Town, and Buhair.

He added that if negotiations fell through, the ministry would have to pay for them itself - forcing it to reschedule other projects.

The minister also revealed plans to distribute 500 plots in a lottery to people who want to build their own homes in the Northern Town, as he answered questions about delays in the project.

'The project is going ahead as planned in two months, with 500 homes at a cost of BD17m already being awarded to a contractor,' said Shaikh Ibrahim.

'This is not all. We are planning to have 1,500 built by the private sector, which we are negotiating with, and in case it collapses we will shoulder the cost ourselves and have many projects rescheduled.

'We are also planning to distribute 500 plots in co-ordination with the Northern Municipality through lottery to those wishing to build their own homes.'

Meanwhile, Shaikh Ibrahim pledged that 761 government homes would be built in Muharraq - with new buildings replacing old apartment blocks. 'A total of 979 homes are also earmarked among new projects that will be carried out in Muharraq,' said Shaikh Ibrahim.

'We have received 6,788 housing requests from Muharraq residents since 2002 and for residents waiting since 1993, we have given out 958 homes and 215 plots.'-TradeArabia News Service