The development of a former Aberdeen prison site into affordable homes for key workers is officially underway.

The £21 million project, which will see Sanctuary create 124 properties in Torry on land once occupied by HMP Craiginches, was made possible by an £8m grant from the Scottish Government.

A total of 18 houses and 106 flats will be available to local teachers, medical staff and other key workers for mid-market rent. By providing accommodation more affordable than the private rented sector, the development will offer up housing options to key workers in Aberdeen.

Plans to redevelop surplus public sector sites into hundreds of affordable homes were announced last year by then social justice secretary Alex Neil.

Peter Martin, Sanctuary Group’s director of development, said: “We at Sanctuary are pleased to work with the Scottish Government on this pilot project. We will deliver much-needed affordable accommodation for those employed in Aberdeen’s public services.

“Our new homes will become an integral part of Torry and provide wider benefits to the community. On top of the employment and training opportunities available on site, Aberdeen City Council has received more than £430,000 for local benefits including community and sports facilities, a car club and improvements to Walker Road Primary School.”

Sanctuary’s site contractor Robertson Construction will recruit eight apprentices over the course of the project. The homes are due to be handed to Sanctuary Scotland Housing Association in March 2018.

Yesterday, minister for local government and housing, Kevin Stewart MSP, cut the sod for construction work to begin.

Mr Stewart, who represents Aberdeen Central, said: “I am delighted that the Scottish Government’s affordable housing supply programme was able to support this project with a grant of over £8m. This will support the delivery of these affordable, high quality homes and will help address the demand for mid-market rented housing for key workers in the Aberdeen housing market area.

“We have committed to deliver 50,000 more affordable homes over the next five years, backed up with investment of more than £3 billion. Projects such as this one today mark another step on the road to delivering that pledge.”

Keith Taylor, regional managing director of Robertson Eastern, added: “We’re very pleased to have been appointed as the contractor for the Sanctuary Scotland Housing Association development at the old Craiginches prison site.

“A large part of our proposal to Sanctuary was focused on supporting and investing in the Torry community.

“Across the life of the project there are a total of 74 training and employment opportunities. These include local employment, work placements, apprenticeships and education opportunities, including formal certificates and N/SVQs.

“As a local business it was important to us that we could offer both employment opportunities and grow the skills of the local community.”