The move is the first step in the development of creating new affordable housing in Carnoustie, Angus.
The demolition will allow for five new homes to be delivered for ex-service personnel with special needs, plus 11 new council houses for rent.
The project is funded in part from the grant received from the Scottish Government as part of Angus Council's Affordable Housing Supply Programme delivery plan.
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Transport Minister Keith Brown attended the site and said: "Today marks the start of an exciting development in providing affordable housing for ex-service personnel. It gives me enormous pleasure to mark the start of demolition that will make way for the construction on this site.
"The Scottish Government funding is helping to support the joint work being done by Houses for Heroes and Angus Council. This is another positive step in our commitment to provide high quality affordable housing."
The clearance of the site is expected to take around 16 weeks, with only the existing sub-station and associated out-building remaining.
(JP/IT)
