• Momentous year ahead for Hong Kong’s construction industry

    2 May 2023

    (2 May 2023, Hong Kong) Hong Kong’s construction industry is looking at a strong year of recovery in 2023 amid the city’s generally improving economy according to the latest Hong Kong Market Intelligence report from Turner & Townsend.

    The global professional services company expects this to be a year of robust recovery for the construction industry due to a number of positive trends, including strong levels of construction output, a solid pipeline of public and private sector projects, and dedicated government investment in the industry. The new report provides a snapshot of the current landscape for Hong Kong’s construction industry, including details about construction output, tender price escalation, and materials costs, as well as the industry’s key challenges and position within the wider economy.

    Commenting on the local industry situation, Daniel Cheung, Director – Strategic Lead, Hong Kong & Macau and Head of Infrastructure, NEA at Turner & Townsend, said:

    “Hong Kong is beginning to turn the corner after a rough few years of COVID-19, and the construction industry is set to play a central role in advancing our city’s renewed development. While the global economic climate remains challenging, the latest Budget clearly indicates the government’s focus on long-term investment in uplifting and upskilling the construction industry to drive major real estate, infrastructure, and land development projects.

    We have already embarked on a year of great construction activity and are looking forward to supporting the government, developers, and corporations in delivering major projects on time and on budget. Professionally managed NEC contracts and the adoption of digital approaches will safeguard the interests of stakeholders, enabling us to deliver optimal value and assurance for our clients.”

    The industry’s ongoing challenges include global inflation, geopolitics, environmental concerns, epidemic risks, and Hong Kong’s skills and labour shortage. While the city’s currency peg to the US dollar has shielded it to some extent from inflation, a skills shortage and potential materials bottlenecks continue to present major risks for the industry going forward.

    Despite these potential downsides, Hong Kong’s tender prices have continued to rise at a slow and steady rate of approximately three to five percent per annum over the past two to three years. Assuming market conditions remain largely stable, the report forecast that tender prices will rise by four percent in 2023.

    The report welcomes the Hong Kong government’s positive 2023-24 budget policy announcements, which show a clear commitment to long-term investment in uplifting and upskilling the construction industry to drive major real estate, infrastructure, and land development projects. The Budget includes plans to upscale housing and infrastructure, major infrastructure projects (including the Airport City, Northern Metropolis, and Kau Yi Chau Artificial Islands, three strategic railways and three major roads, and Hong Kong’s first advanced construction industry building), and financial support for the construction industry, including a HK$100m fund for career development and training allowances.

    Alongside the government’s new efforts to digitise Hong Kong’s construction industry, the report highlights the scope for further efficiency through digital mechanisms for setting up and managing projects. These developments are also useful in collaborative and cost-based contracting, a modern approach which facilitates upfront strategic procurement planning, delivers appropriate contracts for shared project goals and outcomes, establishes fair allocation of risks, and fosters collaboration throughout the supply chain.


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