A new Palestinian city is rising on a West Bank hilltop, hoping to attract families and young professionals despite ethnic tensions in the region.

The planned city of Rawabi, just north of Ramallah, was first proposed years ago, but ongoing conflicts between Israelis and Palestinians stalled the ambitious project.

Construction of apartment buildings and houses is now underway, thanks to Palestinian entrepreneur and developer Bashar Masri, who's been leading the planning.

"We are moving the Palestinian statehood in our heart out to the street and building the nation," Masri told CTV News.

It's the largest building effort yet for the Palestinians and will create thousands of much-needed jobs. Building materials are all made on site and stored in large warehouses.

Rawabi is billed as a state-of-the-art city with a commercial area, schools, playgrounds, walking trails, art venues and medical facilities. The city will have more than 5,000 housing units and is expected to accommodate up to 40,000 people once completed.

But building a new city is no easy feat, especially in the West Bank.

Developers only recently got permission to build a service road to the site and are still waiting for clearance to use the main road leading to Rawabi.

Jewish settlers on the nearby hill are not happy.

"The reaction from the radicals is vicious, nasty," Masri said. "They've attacked the site a few times."

Although most Israelis support Rawabi, it's a "red flag" for many Jewish settlers, said Yuval Yasky, an architecture professor at Betsalel University.

"This is a threat and they won't be able to accept it, unfortunately," he told CTV News.

The first residents of Rawabi are expected to move in over the next few years.

With a report from CTV's Middle East Bureau Chief Martin Seemungal