Demolition works have begun on the former Munro building to make way for the redevelopment of Melbourne’s Queen Victoria Market precinct.

The redevelopment of the site will include the construction of community facilities, interconnecting laneways, a hotel and residential apartments next to the market.

The Queen Victoria Market has traded continuously since 1878 and attracts nearly 10 million visitors each year.

Plans for a $250 million revamp of the tourism hot spot hit a hurdle last year when Victoria’s heritage authority rejected the council’s plans to refurbish the site’s 140-year-old sheds and excavate for an underground car park.

The markets are also the site of Melbourne’s first cemetery, dating back to 1837, with about 6500 burial sites remaining. It’s also believed to be the largest early colonial cemetery in Australia.

It was added to the National Heritage list in July, giving the market the same status as the Melbourne Cricket Ground, Sydney’s Bondi Beach and the Australian War Memorial in Canberra.

It’s the 114th place to be added to the nation’s list of important heritage sites.