Wates Residential has been appointed to work flood defences programme between the River Adur and Shoreham beach.
Southern Housing Group selected the developer and a total of £24million is being invested in the project.
The plans include a new waterfront development in Shoreham and comes after Homes England allocated £10m from its House and Infrastructure Fund (HIF) to facilitate the construction of new flood defences along the river Adur where the new homes will be situated.
The regeneration work to the river wall will take approximately nine months to complete. Following this, work is expected to commence on the main programme to develop new waterfront homes in early 2020.
Group Development Director, Oliver Boundy, said: "We are delighted to have begun work on the enabling phase of our 540 home Free Wharf development on the harbour at Shoreham-by-Sea.
"We have enjoyed a positive relationship and support from Adur and Worthing Council and Homes England and will continue to work closely with them through the construction phase alongside our contractor, Wates Residential. Southern Housing Group is proud to be playing its part in the provision of much needed new homes in this regeneration area."
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