The long-derelict former rest-home at 28 Montpellier St was bought by Dunedin developer Blue Sky Property Group after being listed in September last year.
Abandoned since 2011, the site has become a magnet for vandals, illegal dumping and rats.
It has severely deteriorated over the years, especially after three suspicious fires which caused further damage in 2017, 2018 and 2025.
Blue Sky Property Group director Lyndon Fairbairn said he was really pleased for the neighbourhood the building was coming down.
‘‘They’ve put up with some pretty unruly behaviour from a few street kids and a bit of vandalism.
‘‘They’ve probably had some heightened anxiety over the last 15 years.
‘‘I’m sure they will be cracking the Champagne knowing it’s coming down.’’
The demolition contract went to a local company and was expected to take a few weeks.
Contractors had begun working on the inside of the building to make room for bigger equipment.
It was built in two stages — first in the early 1900s and again in the 1980s — and there was a lot of concrete and steel which made it a complex demolition, Mr Fairbairn said.
Asbestos was also found in some of the oldest areas of the building.
‘‘Not everyone actually demolishes an old, burnt-out hospital, so to go through that process is quite challenging.’’
A security company had also been employed over the past two months to provide 24-hour surveillance of the site.
The former rest-home occupied most of the land on the site.
Once demolished, the full area would be assessed before design work on the new homes commenced.
There was a lot of heritage in the area and the company wanted to build something that would complement and elevate the area.
The building could not have been restored ‘‘in any way, shape or form’’, Mr Fairbairn said.
‘‘It has to come down for the sake of the neighbourhood and Dunedin.’’
