Lovell is working with not-for-profit housing manager United Welsh to deliver a £9.6m scheme at the historic former Caerphilly Miners’ Hospital.
The scheme, named Beeches Village, will provide 82 new houses, split as 40 for rent, 22 for sale and 20 for shared ownership.
It will retain the 88-year-old main hospital building, for which a fundraising campaign is in progress to convert it to a community centre.
Lovell is on site for demolition work, and building is due for completion in the summer of 2014.
Regional director Nick Kurobasa said: “The scheme will help address the need for high-quality new energy-efficient affordable new homes for rent and low-cost ownership as well as homes that will be for sale on the open market.”