Hong Kong remains the priciest Asian city to build in: study

Its low technology adoption rate is driving up construction costs.

Hong Kong ranked as the costliest Asian city to build in due to its relatively low technology adoption rate and a pressing need to improve productivity levels amongst its ageing workforce, according to the International Construction Costs 2019 report published by global design and consultancy firm Arcadis.

Trailing behind Hong Kong were Macau, Tokyo and Singapore, whilst megacities in China were amongst the world’s cheapest cities to build in along with Kuala Lumpur, Jakarta, Mumbai, New Delhi, Bengaluru and Bangkok.

The report, which assessed the relative cost of construction in 100 of the world’s major cities, found that Hong Kong’s ranking remained the same despite an increase in the size of the index from 50 cities in 2018 to 100 in 2019.

Several major long-term civil projects reached completion in the country in the past years, including the Hong Kong-Zhuhai-Macau Bridge and the West Kowloon Railway Station. Link here

“There is a potential to leave a gap in ongoing capital works, but the funding for Capital Works projects approved in 2017/18 and 2018/19 by Hong Kong’s Legislative Council increased substantially compared with the past three preceeding years,” Arcadis noted, adding that the approved funding in these two years are close to the level in 2012/13 and 2013/14, which suggests a healthy pipeline of projects for 2019 and 2020.

That said, Arcadis expects that there will be a reduction in the level of construction activities, especially on residential developments due mainly to the shortage of land. In addition, there is also growing uncertainty around the impact of the US-China trade war and the local property market on future construction output.

Construction costs are expected to drop by 2% in 2019 and a further 1% in 2020.

According to Francis Au, head of Hong Kong and Macau at Arcadis Asia, innovation and digitisation will present an opportunity for the Hong Kong construction industry to increase productivity and lower costs.

Au added that in 2018, $1b was outlined by the government for the establishment of the Construction Innovation and Technology Fund (CITF) to encourage the construction industry and its practitioners to adopt innovative construction methods and new technologies. “The pilot project of Hong Kong’s first Modular Integrated Construction (MIC) for the Pak Shing Kok Disciplined Services Quarters shows a move towards a smarter future for the industry.”

Based on Development Bureau Technical Circular (Works) issued on 27 December 2018, all public capital works projects with estimates greater than $30m shall use Building Information Modelling (BIM) technology, which aims to produce an overall better product, improve productivity such as reducing rework and errors, saving time and reducing cost.