The trenches are being dug for the remainder of the 24 District Six homes being built as part of a project that will eventually see about 4 000 families return to the area.
A huge ceremony was held on February 11 when Nelson Mandela handed over the symbolic keys to two of the oldest beneficiaries, octogenarians Dan Ndzabela and Ebrahiem Murat.
In June, the first nine beneficiaries moved into their homes in Chapel Street.
Now 15 more homes are being built thanks to Coessa Holdings developers at a cost of R1-million instead of R3,7-million.
According to chairperson of the District Six Beneficiary Trust, Anwah Nagia, Coessa had also undertaken to build 3 976 more houses in the area at near cost price, with construction on 100 houses starting in 2005.
Chief executive of the trust, Naz Ally, said they were "getting necessary approval from the council for the next 100 houses".
"We announced the names of the beneficiaries last year and it is time for them to get their houses. The preliminary plans have been drawn up, and by the time these 24 houses are done, everything will be in place for the 100."
Ally said construction of the 100 houses would begin by March, 2005.
Housing Minister Lindiwe Sisulu announced in August that the N2 housing project would include District Six, as the government would contribute to bulk infrastructure for the new development.
Nagia said: "We are completely elated to have Coessa as partners. They have asked how they can partner us to build affordable homes and return people to District Six."
"This is the only way we can return people because building costs are high."
Nagia said the trust had also signed an agreement with a large financial institution to provide funding.
"We are changing the whole process of social development housing. We will not deliver shacks and low-cost homes, but dignified homes where people can leave a family legacy."
Responding to past criticism from communities for the slow pace at which the houses are being delivered, Nagia said: "People have been critical out of ignorance. We are setting precedents and have laid down the gauntlet in not accepting anything less than these standards. We appeal to people to be patient."
Nagia said District Six was "creating a working-class community in the city centre which has been denied to ordinary people".
"They are coming back in their thousands and will help to depolarise Cape Town. But it is not going to be a dormitory town or a place with religious and class divisions," he said.