"Living in a hobbit house is the smart and sustainable way to live in the future," John Higson, co-founder of the project, told The Local.se.
Higson and his wife co-founded Dromgarden on the island of Musko, a self-sustainable and eco-friendly farm and village, in 2011 but the idea to build hobbit houses didn't come until Higson heard about one built in Wales by a man named Simon Dale.
"Seeing Simon's houses blew me away. They're beautiful, unique and completely sustainable, and what a fantastic way to live," Higson said.
"I've always enjoyed living a little bit differently. The idea of just a hobbit-style village came from talking to other people interested in being part of Dromgarden," he said.
The Swedish hobbit houses will be constructed with natural materials like straw, clay and timber and erected on the edge of a forest overlooking some fields, The Local.se reported.
The first house is to be completed by the end of the year, with about 15 more houses being planned under Dale's supervision.
"People will be invited to join Simon Dale to plan their houses but we're debating as to whether it would be a good idea to build a pub first," Higson said.
"You can't have a hobbit village without a pub."