The island’s building trade is seeing a downturn in both large and small scale developments, hitting the building trade.
Enterprise Minister Tim Johnston was asked about issues with the sector in Tynwald.
The Minister said his department has “become aware of concerns of a slowdown in the sector”, which employs around 3,000.
He said: “Earlier this year, the department was aware of a significantly strong pipeline in major planning applications which are either approved or progressing.
“But of course, having planning approval does not necessarily translate into a viable project proceeding whilst the current levels of inflation have returned to relatively low levels, the underlying increase in raw material costs and labor costs will have a direct knock on effect on the costs of developments.
“Linked to this, the increase in interest rates will have impacted on the available finance, finances of both developers and investors, both large and small, and there is clear evidence that consumer demand is tempered at present as a result of all of these factors.”
The minster also noted that the government’s own capital scheme is behind where it would have been before Covid and that some local authorities have also not progressed with some schemes.
Difficult Times
Mr Johnston said that the government will be engaging with Construction Isle of Man to gain better understanding of the issues facing the sector.
He added: “Whilst there appears a level of slowdown, there are also a number of large projects at the critical final stages.
“Through the island infrastructure scheme, to help developers with the viability of projects, to stimulate the market, which is now in its second iteration, we are now seeking the impact the initial scheme has had in the marketplace, with four large schemes progressing through the planning stage and to commencement.
“Combined, these developments represent over £90m of private sector investment into our island. With the second round of the scheme now open, we are now seeing many inquiries from smaller developments across the island. But as the scheme is open for 12 months, it will take time to complete the picture.”
Despite this, Mr Johnston warned of difficult times to come for the sector, especially for some smaller businesses.
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