Construction of the palace began soon after its site was presented to Knyaz Alexander Battenberg by the Greek bishopric on 16 March 1882. At the time, the land was occupied by two small monasteries, St. Demetrius and St. Constantine; these were subsequently converted into the first royal residence on the site. This conversion was constructed to plans drawn the Viennese architect Viktor Rumpelmayer in 1885. Initially, the palace was named "Sandrovo" after the Italian diminutive of Alexander's name — Sandro. Later the knyaz extended the estate to its current area of . However, no further building work was carried out.