The cost of redeveloping the former Nurses’ Home has risen significantly.

Last month, Manx Development Corporation announced construction works on the old building are proceeding at pace and on budget.

However, a Tynwald question has revealed that development costs were originally forecast to be £8.9m but following a revised business case these had risen to £10.3m by January last year.

Then, following a further revised business case, MDC reported in July the current expected gross project cost (inclusive of VAT) is now £11.03m.

Details were given by Treasury Minister Dr Alex Allinson in a written answer to Tynwald question from Douglas North MHK John Wannenburgh. The full refurbishment of the Westmoreland Road building will provide 37 one and two-bedroomed apartments, together with a coffee and patisserie facility and a glazed rooftop extension.

The project is currently on target to be completed in early 2025.

Property development company MDC was set up in March 2021 with the remit of being the catalyst for the regeneration of brownfield sites. It operates at arm’s length from its sole shareholder, the Treasury.

Dr Allinson said in his written reply: ‘Whilst the development cost has increased, the return to the shareholder over the project term has also increased since the original feasibility report.

‘The increase in cost from the original feasibility business case was primarily the result of inflation and an increase in the costs attributed the cost of the enabling works.

‘The cost is tracking in line with budget and proceeding in line with the green loan conditions within the revolving credit facility terms.

‘The further cost increase is attributable to changes to the design and constructions costs, prolongation of the enabling works, reallocation of Manx Development Corporation overheads and increased property costs.’

Dr Allinson said Treasury had been notified about the revised costs in August 2023 as part of the process to approve a drawdown under the commercial loan facility that is in place with Lloyds Bank.

Gross project costs include the cost of acquiring the land and existing buildings at market value, enabling works, design costs as well as the main refurbishment works.

The former Nurses’ Home building was acquired by MDC at market value, being £950,000 at the time of acquisition.

MDC is also behind the Westmoreland Village project which secured planning consent in February despite concerns over insufficient parking provision

It has spent £2m buying up property to make way for the scheme which comprises 133 new homes split across apartments, townhouses, small blocks of flats and a senior living block.

It also includes a new scout hut/community pavilion, and refurbishment and extension of Crookall House as offices.