The two-storey building is part of a project of 37 villas at a compound along Al Ain Street where a bus stop is also located.
No casualties or injuries have been reported, according to a number of construction workers who immediately evacuated their posts when the fire started.
A worker told Gulf Times that a possible cause of the fire could be the burning of some Styrofoam used for waterproofing.
The fire broke out around 10am.
A number of Civil Defence fire trucks, which rushed to the spot, immediately doused the flames.