Hong Kong’s construction outlook is bright

Byjirong

Updated Tue, 26 Jan 2016 09:03:53 GMT

Hong Kong’s construction industry has been expanding at a rapid pace and is set to further maintain a healthy growth in the next five years, according to a new report by Timetric’s Construction Intelligence Center (CIC).

Hong Kong’s construction industry’s output value recorded a CAGR of 8.37% during the review period (2010–2014). The industry’s value rose from US$14.3 billion in 2010 to US$19.8 billion in 2014 in real terms and measured at a constant 2010 US dollar exchange rate. Improving investor confidence and global economic conditions supported growth. Public and private sector investments also contributed to the industry growth as part of the Vision 2030 program.

Over the forecast period (2015–2019), industry growth is expected to be supported by government investment in infrastructure and housing construction projects. The government aims to improve access to transport networks, improve tourism infrastructure, and increase energy delivery by investing in renewable projects.

Consequently, the industry is expected to register a forecast period CAGR of 6.91% in real terms, to reach US$27.6 billion in 2019. However, there are risks to this forecast, not least the impact of a sharper than expected slowdown in China’s economy. Moreover, there are concerns over the potential for disruption in major infrastructure projects such as the Guangzhou-Shenzhen-Hong Kong rail link.

Infrastructure construction is the largest market in the industry, accounting for over 36% of the industry’s total value in 2014. Residential construction is also a sizeable sector, accounting for around 32% of the total value in 2014. The latter market is expected to be supported by urbanisation and positive developments in regional economic conditions. According to the United Nations Department of Economic and Social Affairs (UNDESA), Hong Kong’s urban population is forecast to rise from 7.1 million in 2010 to 7.6 million by 2020, and 7.9 million by 2030, generating demand for residential construction over the next five years.