Hong Kong remains the most expensive city for construction in Asia

(23 May 2018, Hong Kong ) Hong Kong remains the most expensive city for construction in Asia as government and industry turn to digital solutions

• Hong Kong ranked 3^rdin global city index
• City dropped one place from 2017 due to new US entrants and strength of US dollar
• Hong Kong has seen a fall in work volume with construction output lower than in 2017
• Construction costs remain high due to an aging workforce, shortage in labour, and expensive finishing work and imported building materials

Hong Kong remains the most expensive Asian city to build in, according to the International Construction Costs 2018 report published by Arcadis, the leading global Design & Consultancy firm for natural and built assets. Hong Kong fell one position on the global ranking from last year, making it the third-most expensive city in the world in which to build after San Francisco and New York. Macau is the ninth most expensive city in the world, with the megacities of Shanghai, Beijing and Wuhan ranking 40^th, 41^st and 44^th respectively.

The report details and ranks the relative cost of construction in 50 of the world’s major cities against the backdrop of a growing global economy in 2018. Following a stronger-than-expected 2017, cities around the world are experiencing an upturn, and this improved economic performance will accelerate the demand for construction. Huge opportunities will then be created, with Asia along with the United States and Europe likely to be notable hotspots for construction growth. Equally, this will place further pressure on construction costs, with certainty and value for the money remaining high on the agenda for clients everywhere, especially in the light of a stronger US dollar.

Hong Kong’s high ranking comes as the construction market has slowed, but continues to see good levels of demand coupled with constrained capacity to deliver. Arcadis expects growth in construction output to increase by under two percent per annum to 2020, marginally lower than the growth rate seen since 2005. The residential and infrastructure sectors are anticipated to be the main sources of demand.

Francis Au, Head of Hong Kong at Arcadis Asia, commented: “Hong Kong’s cost of construction remains high compared to other world cities mainly due to our ageing workforce and labor force shortages. The city has been a slow adopter of digital solutions such as Building Information Modelling (BIM) and Modular Integrated Construction (MiC). With the government’s HKD$1 billion Construction Innovation and Technology Fund, we hope to see greater pickup of new technologies, which will in turn improve the industry’s productivity and efficiency, as well as stabilizing the construction cost.”

The Asian cities ranking in Arcadis’ International Construction Costs 2018 are below:

 Francis Au continues: “We know through our works with clients that those who invest in digital technologies gain a sustainable competitive advantage, and this factor is becoming increasingly important in Hong Kong where demand for construction services exceeds the supply of skilled labor.”

The full report can be downloaded here.