Westbay Nursing Home on Albert Road was destroyed in a blaze in May 2005.
33 residents were helped to safety from the burning building with the assistance of bowlers from the adjacent Broughty Bowling Club.
The bowlers spotted smoke emanating from the building and called the fire brigade, before helping the home’s residents escape.
Westbay’s owners later pledged to rebuild the home, but the restoration never happened and the building lay empty for years.
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Plans to build flats were lodged with Dundee City Council last year.
Edinburgh developers Chamberlain Bell have now started building 17 apartments on the land.
The development will involve the construction of 16 two-bedroom flats and one three-bedroom penthouse apartment.
The first phase of construction is expected to be completed by summer.
Eight of the 17 properties have already been sold.
Dundee property firm Thorntons are acting on behalf of the developers.
Director of property sales George Solley said: "This site has already attracted a lot of interest from buyers, with eight of the 17 already sold from plan.
"This underlines the exceptional quality and setting of the Westbay project.
"The fire at Westbay was much publicised locally and the site has been much talked about since as it has been empty for so long. It was hugely encouraging to see a developer committing to build on it."
Chamberlain Bell technical director Alan Bell said: "We are very encouraged by the positive response to this new development. We have been looking forward to working on the site and watching it come to life."
(IT)
