Government has signed a deal to buy the former Loughlands hotel site from developer Gilbert Lopes when he has built 96 budget condos for sale.

Work is set to start next month with the first set of 36 homes due to be ready at the Paget site within 16 months.

The former hotel, which is a grade three listed building, will be converted into a day care centre.

It will be ringed by 28 three-bed homes and 68 two-bed homes available at $450,000 to $500,000 each ? much lower than the average Bermuda condo which now fetches more than $800,000.

Government has refused to reveal the total project cost at the seven-acre site, although if all 96 condos were sold for $450,000 that would put a value on the property of $43.2 million.

The current lawn and tennis courts will make way for the blocks but a playground will be built while zoned green land at the west of the site will remain with pathways added.

Government will buy the whole site upon completion, backed by the Bank of Butterfield.

Works and Engineering and Housing Minister David Burch said: ?More than housing, this project represents genuine economic empowerment.

?Those young professionals who struggle to understand how their collective household income of $150,000 still cannot afford them a home need look no further.

?Making homes available to first time homeowners at prices that are simply unavailable in the ordinary market place represents the ?hand-up? that honest, hardworking young Bermudians so desperately need.?

Mr. Lopes described it a low-profit venture for himself, while Government said it will not make a profit on the deal.

Sen. Burch said Government, through the Bermuda Housing Corporation, will initially own all lands and buildings on the redeveloped site.

Completed units, which will be between 11,000 and 13,000 square feet, will then be resold to first-time home owners while a condo association will be formed to manage the site.

Last month. Government signed a memorandum of understanding with Mr. Lopes but is waiting to secure building permits which Sen. Burch said should take six weeks.

Duty free exemptions will reduce the price of imported materials for the project.

Tourism has agreed to support the rezoning of the land while the Ministry of Environment has already drafted a Special Development Order to fast track planning.

It will be signed on the completion of the sale and purchase agreement between Government and Mr. Lopes.

The deal marks a quick U-turn for Mr. Lopes, who in October last year had obtained final planning approval to build a 82-room hotel complete with 40 condos and two swimming pools at the site.

Mr. Lopes, who has owned the site for three years, said Bermuda?s tourism problems meant a hotel wasn?t viable.

He said the condos would come on line in phases over three years in sets of about 30.

Sen. Burch said Government was now working on a number of similar initiatives to provide affordable housing.

Asked about the state of play on the Harbourside Village project in Southside Sen. Burch said the latest plans, thought to involve moving the project over the road, had yet to go to Cabinet.

He said he was hoping to get proposals to his colleagues by the end of this month and it would be the next thing on his agenda having secured the Loughlands deal.

Last night Shadow Housing Minister Kim Swan said the United Bermuda Party applauded the joint efforts by Mr. Lopes and the Minister of Housing to build affordable homes.