The foundations are being laid for buildings which will become 74 new apartments and 18 new houses.
Work has temporarily halted due to the coronavirus outbreak.
The site, seen in the Express & Star's drone image, is located just in front of the hospital near the city's ring road.
In the foreground a series of rectangular shapes can be seen which will become rooms for the homes.
The site is located on land which was once a bus depot on Cleveland Road.
The background of the photograph shows the historic Royal Hospital which will now be converted into homes for people aged over 55.
The hospital opened in 1849 at a building cost of £18,898, according to historians.
Today the development would cost millions. It closed in 1997 with services transferred to Wolverhampton's New Cross Hospital.
The hospital is grand in design and the land itself represents a gateway to the city.
These latest developments will see this key plot of transformed for the benefit of the city.
Cannock-based Jessup will be working with Walsall-based whg on the former hospital development. The hospital site's former Porters Lodge will also be refurbished.
The new homes at the front of the site will be for sale, shared ownership and affordable rent.
Both Jessup and whg are working on the Cleveland Road development also.
A spokesman for Jessup said: "To protect staff, clients, supply chain and local communities during the COVID-19, we took the decision to close all sites last week. Construction work has been suspended on all Jessup sites as of March 27, until further notice. Essential site security and safety checks may be undertaken periodically."