More than 1,000 Palestinian families took possession of new apartments Saturday as part of a large Qatari-funded housing project in the Gaza Strip.

The units are the first batch of a 3,000-apartment complex that was announced when the former Qatari ruler, Sheik Hamad bin Khalifa Al Thani, became the first head of state to visit Hamas-ruled Gaza in 2012.

Hamad City sits on dunes that were part of the former Jewish settlement of Gush Katif. They started before the Israel-Hamas war in 2014 that damaged or destroyed nearly 100,000 homes.

The construction of the residential city is separate from the post-war rebuilding, but being the largest housing project ever makes it significant for the 1.8 million residents of the coastal enclave, who live under Israeli and Egyptian blockade and travel restrictions.

Israel restricts building materials to Gaza for fears that the coastal strip's Islamic Hamas rulers may use them in building its attack tunnels. To overcome the restrictions, Qatar arranges with Israel and the Palestinian Authority directly to deliver the needed materials for its projects.

Qatar allocated $145 million for Hamad City. The Qatari envoy overseeing the project, Mohammed al-Amadi, says Gaza needs 130,000 housing units. "We are replenishing parts of Gaza's needs," he said.

On Saturday, Qatari and Palestinian flags adorned the complex as buses dropped hundreds of people who will receive the apartments. Posters of the former Qatari emir, his succeeding son, and Palestinian President Mahmoud Abbas hung from the buildings.

The families received certificates at the event, but won't move in for another two months due to minor infrastructure work, such as paving the roads to the city and connecting it with water network.

Among those who received certificates was Samia al-Nakhala, 39, who lives with her husband and son in a home that costs $250 a month in rent. Now she will pay the cost of the house in monthly installations of $170. "Instead of throwing my money in the air every month, now I will be paying for my own home," she said.

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Ismail Haniya, Hamas' chief in Gaza, described the opening of the first part of the city as "a historic moment."

Hamas still holds control of Gaza despite ceding power to a transitional government it formed after a reconciliation deal with Mr. Abbas' Fatah party in 2014.