Hong Kong’s construction industry is set for stable growth in 2024 as the economy continues to recover in the aftermath of COVID-19, according to the latest Hong Kong market intelligence report from global professional services company, Turner & Townsend.
The report highlights a robust pipeline of key public and private sector projects focusing on housing, public infrastructure, and investments into technology, such as the anticipated railway projects designed to enhance connectivity and transport options for travel and freight within the Greater Bay Area (GBA).
Hong Kong’s GDP is forecast to grow between 2.5 to 3.5 percent in 2024, following a 3.2 percent increase in 2023. Due to an expected dip in private sector construction activity and spending on public projects this year, Hong Kong’s construction industry tender prices are predicted to rise by 2.0 percent in 2024, compared to 4.0 percent in 2023, 3.0 percent in 2022, and 5.0 percent in 2021.
A stronger Hong Kong dollar and reduced demand for materials from Mainland China are expected to lower material costs this year. The price of galvanised mild steel plates dropped by 18.3 percent from December 2022 to December 2023, while sand decreased by 4.1 percent, and aggregates by 8.3 percent. High tensile steel bars saw a 7.3 percent decrease, while Portland cement had a slight increase of 0.9 percent, and sawn hardwood costs remained unchanged.
Fluctuating material costs continue to pose a challenge for Hong Kong’s construction industry this year as the existing shortage of skilled workers, rising labour costs and high construction costs continue to hamper growth.
The Hong Kong government is committed to land and housing developments, with a target to provide 440,000 housing units by 2033-34, with a 70:30 split between public and private housing.
The report acknowledges the government’s positive 2024-25 budget policy, demonstrating a commitment to long-term investment in the construction industry. Capital works expenditure is projected to reach up to HK$90bn, focusing on enhancing infrastructure connectivity within the GBA through projects like the ‘GBA on the Rail’ initiative.
Technology remains a prime focus, with investments in the Hong Kong Microelectronics Research and Development Institute (HKMSRDI) and the Cyberport 5 project. The establishment of a steering committee by the Development Bureau (DEVB) to enhance the use of Modular Integrated Construction (MiC) and evaluation of investment in the MiC supply chain is also expected to boost innovation and productivity in the construction industry.
These initiatives, alongside recommendations from the Digital Economy Development Committee (DEDC) aim to fast-track growth in the IT sector, adding 79,000 square metres of gross floor area to existing technology infrastructure.
Daniel Cheung, Director, Strategic Lead, Hong Kong & Macau, at Turner & Townsend, said: “The focus on the construction industry as a key pillar of Hong Kong’s growth continues, underscored by ongoing government commitment. The Budget focused on infrastructure spending reaffirms the government’s growth ambitions. With key projects reprioritised and newer funding models being deployed, especially with the Northern Metropolis project and transport infrastructure expansion, the government’s ability to enable higher efficiency and cost-consciousness in project delivery becomes imperative.
Overall, the construction market has moved towards a steady, yet cautious growth outlook given current macro-economic factors. As Hong Kong’s construction projects become larger and more complex, financial prudence and effective programme management becomes increasingly important in assessing and executing the most appropriate project delivery model to achieve planned project outcomes on time, secure procurement savings, and deliver lasting value to businesses and Hong Kong’s fast-evolving built environment.”
About Turner & Townsend
Turner & Townsend is a global professional services company with over 10,000 people in 48 countries. Collaborating with our clients across real estate, infrastructure and natural resources sectors, we specialise in major programmes, programme management, cost and commercial management, net zero and digital solutions.
We are majority-owned by CBRE Group, Inc., the world’s largest commercial real estate services and investment firm, with our partners holding a significant minority interest. Turner & Townsend and CBRE work together to provide clients with the premier programme, project and cost management offering in markets around the world.
We are passionate about making the difference, transforming performance for a green, inclusive and productive world.www.turnerandtownsend.com
Notes to Editors
The full report can is available on the Turner & Townsend website: https://www.turnerandtownsend.com/en/perspectives/hong-kong-market-intelligence-strategising-for-growth-and-economic-resilience/?utm_source=pr&utm_medium=media&utm_campaign=mi&utm_content=hkmi_1
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