Balfour Beatty has started work on a £5.7 million redevelopment project in Dumfries.
The Moat Brae site is to be transformed into a National Centre for Children's Literature and Storytelling.
The house and garden served as inspiration to J. M. Barrie to create the story of Peter Pan.
Features will include a learning and education suite, along with a café, shop and magical interpretation to inspire visitors. In addition, the grounds will be reinvented as a Neverland Discovery Garden, with Peter Pan and Neverland-themed interactive features.
Overall, the Peter Pan Moat Brae Trust (PPMBT) is expecting to welcome 45,000 visitors a year once the facility is completed in 2018.
Funding support for the project has been secured from The National Lottery, Creative Scotland, Historic Environment Scotland and Dumfries and Galloway Council.
Dame Barbara Kelly, PPMBT Chair, said: "It's all systems go as the restoration begins and the house and garden are transformed. Moat Brae will soon become an inspirational year-round local, national and international visitor attraction and resource for all ages to enjoy.
"The project's contribution to the economic regeneration of Dumfries is of tremendous importance and cannot be under-estimated. It will directly create at least a dozen new jobs and will provide many other opportunities for people in the area."
Stephen Scott, Regional Managing Director, Balfour Beatty, said: "We are delighted to be a part of this extremely unusual and historic project, to create the new home for children's literature and storytelling.
"We will utilise our extensive knowledge of complex restoration projects and specialised conservation techniques, to ensure that we deliver a building that will inspire future generations for years to come."
(LM)
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