Report on the construction industry

On 23 September the JCRA published its report on the construction industry.  As part of its research the JCRA commissioned the Policy Centre to undertake a largely desk-based study to describe and analyse the construction sector in Jersey. This report, completed in June 2024,  was based on published material, supplemented by informal confidential discussion with two industry stakeholders.

Following is a summary of the report.

There are three main groups of participants in the construction process: the client, the main contractor and subcontractors. However, there are any number of variations on this basic structure including design and build, joint ventures and the developer also being the contractor. Some main contractors undertake the construction work themselves while others rely heavily on subcontractors. And contractors vary the use they make of subcontractors so as make the most efficient use of their resources.

Both construction and development activities are inherently risky, particularly because of planning risks and the relatively long time frame from conception to completion of a project. Various techniques are used to mitigate these risks.

In 2022 the construction industry accounted for 7.3% of economic activity and just under 10% of employment in Jersey. The industry is a larger component of the economy than it is in Guernsey, the Isle of Man and the UK.

The major developers are the Government of Jersey, Andium Homes (the Jersey’s Government’s social housing provider), the (Government-owned) Jersey Development Company, and two private companies: Dandara and Le Masurier. However, the largest component of construction demand is capital improvements by home owners.

The construction industry has nearly 1,500 businesses over half of which are one-person businesses. 10 companies employ 50 or more staff.

The major contractors are Dandara, for its own developments but also for other clients, Rok and Legendre. There are many smaller general contractors and specialist service and equipment providers. Companies specialising in home improvements are particularly prominent. Local companies also supply raw materials, in particular concrete, aggregates and stone surfaces. UK-based contractors and workers also operate in Jersey.

Improvements by home owners account for about 30% of total construction activity. Social housing, private housing and commercial developments show significant year-to-year variation but on average each accounts for 15-20% of total activity. Infrastructure and health and education facilities have a base expenditure of around 10% of the total but the new hospital will massively increase that proportion in 2026 and 2027. Repairs and maintenance account for about 10-15% of the total.

The vast majority of all construction work is handled on-island by local firms. Off-island contractors are most likely to be employed for major contracts or highly specialised services. However, the market economy is such that UK contractors and individual workers are able to operate in Jersey with little difficulty and both help fill gaps in the supply chain and exert competitive pressure on local companies.

Special factors affecting the construction market in Jersey are that it is a small island and a separate legal jurisdiction, the dysfunctional planning system, articulated in the 2023 McKinnon Report, and the government being unpredictable in respect of its own developments.

The industry currently identifies input prices, profitability and low capacity utilisation as being major issues.

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