South Korea’s Daelim Industrial Company is set to develop a 500,000-square-metre residential town in Tehran, according to local media reports.

The $1bn project will be developed in the township of Kharazmi, 50 kilometres south of Tehran, reported the local Press TV.

The city is being built as part of a collection of towns, which are being developed to ease congestion in the Iranian capital.

Iran is the sixth-largest market for South Korean contractors, according to a statement by the country’s Ministry of Trade, Industry and Energy.

Export-Import Bank of Korea (Korea Eximbank) has previously said in a statement that it is ready to provide project financing, loans and credit to Korean firms trying to secure business in Iran.