Real Estate and Construction Services Industry in Hong Kong
Overview
- Building and construction: Hong Kong companies have gained a reputation over the years for the rapid construction of quality high-rise apartment blocks and office towers. The adoption of specialised construction techniques, such as reclamation and design-and-build methods, has made Hong Kong a regional leader.
- Architecture: Hong Kong is a leading expert in high-rise design, slope design, high-density design and designing with space constraints. It is renowned for high-rise buildings typified by the skyscrapers in Hong Kong’s central business district, which showcase the innovative application of building materials, technology and designs combined with the versatility of Hong Kong's architects.
- Engineering: Hong Kong's engineers are active in exporting their services to the region, particularly to Mainland China. Major types of professional engineering services currently being exported include project management, building services work and engineering consulting.
- Surveying: Hong Kong is the region's leader in the surveying profession in terms of experience and technical expertise. The buoyant construction market over the last two decades has provided invaluable exposure for the local surveying profession to a wide range of projects.
Industry Data
Construction
Major Indicators of the Construction Sector
2018 |
2019 |
YOY % |
|
Establishments |
26,418 |
24,822 |
-6.0 |
Employment |
192,042 |
164,651 |
-14.3 |
Gross value of construction works performed (HK$ million) |
409,778 |
385,177 |
-6.0 |
Dec 2020 (YOY %) |
Mar 2021 (YOY%) |
|
Number of Construction Sites |
1,668 (-0.6) |
1,681 (+3.5) |
Public |
809 (+15.1) |
789 (+3.5) |
Private |
859 (-11.9) |
892 (+3.5) |
Employment at Construction Sites |
96,117 (-3.8) |
102,702 (+1.6) |
Public |
41,199 (+9.4) |
43,129 (+10.6) |
Private |
54,918 (-11.8) |
59,573 (-4.0) |
Gross Value of Construction Works Performed by Main Contractors
Sector |
2018 |
2019 |
2020 |
|||
HK$ million |
YOY % |
HK$ million |
YOY % |
HK$ million |
YOY % |
|
Private sector sites |
75,552 |
+0.8 |
73,286 |
-3.0 |
58,664 |
-20.0 |
Public sector sites |
75,856 |
-13.7 |
62,697 |
-17.3 |
70,428 |
+12.3 |
Locations other than sites |
100,768 |
+15.7 |
100,455 |
-0.3 |
97,342 |
-3.1 |
All group |
252,176 |
+0.9 |
236,438 |
-6.2 |
226,434 |
-4.2 |
Major Indicators of the Real Estate Sector
2018 |
2019 |
YOY% |
|
Establishment |
9,859 |
10,240 |
+3.9 |
Employment |
116,526 |
106,024 |
-9.0 |
Number of real estate development projects |
320 |
300 |
-6.3 |
Private residential premises |
216 |
213 |
-1.4 |
Office buildings |
14 |
20 |
+42.9 |
Major Indicators of the Architectural, Surveying and Engineering Services Sector Related to Real Estate and Construction
Dec 2020 (YOY%) |
Mar 2021 (YOY%) |
|
Establishment |
2,692 (+3.4) |
2,698 (+2.5) |
Employment |
30,309 (+2.1) |
30,266 (+2.3) |
Types of Real Estate and Construction Services
Building and construction |
|
Architecture |
|
Engineering |
|
Surveying |
|
Membership of the HKIE |
Number of Members as at Jun 2020 |
Civil Division |
9,136 |
Structural Division |
6,157 |
Building Services Division |
5,415 |
Geotechnical Division |
4,883 |
Environmental Division |
4,728 |
Electrical Division |
3,439 |
Mechanical, Marine, Naval Architecture & Chemical Division |
3,280 |
Information Technology Division |
2,442 |
Corporate Membership of HKIS |
Number of members as of Dec 2020 |
Quantity Surveying |
3,244 |
General Practice |
2,125# |
Building Surveying |
1,464# |
Property and Facility Management |
788# |
Land Surveying |
327 |
Planning and Development |
97# |
Hong Kong Exports of Services
2017 |
2018 |
2019 |
|
Construction Services | |||
Value (HK$ million) |
969 |
782 |
687 |
Share of total service exports (%) |
0.1 |
0.1 |
0.1 |
YOY growth (%) |
+2.6 |
-19.3 |
-12.1 |
Architectural, Engineering, Scientific and Other Technical Services | |||
Value (HK$ million) |
4,262 |
4,571 |
4,304 |
Share of total service exports (%) |
3.8 |
3.9 |
4.0 |
YOY growth (%) |
+7.3 |
+7.3 |
-5.8 |
Industry Development and Market Outlook
Investment in Local Public Infrastructure To achieve the objective of promoting economic growth through infrastructural development, the Hong Kong government has been increasing its infrastructure investment over the past few years. Hong Kong’s ten mega infrastructure projects, first announced in the 2007 Policy Address, are being rolled out in phases and several transport projects are being carried forward in tandem. The Hong Kong-Zhuhai-Macao Bridge and Guangzhou-Shenzhen-Hong Kong Express Rail Link were opened in 2018, improving logistics and transport efficiency between Hong Kong and mainland cities. The West Kowloon Cultural District, an important cultural infrastructure investment of Hong Kong, has launched The Xiqu Centre, its first landmark performing arts venue, in January 2019. Progress has also been made on the Rail Gen 2.0 project, with full Tuen Ma Line commenced services in June this year together with two new MTR stations, namely To Kwa Wan and Sung Wong Toi. Other major projects under way include MTR’s East Rail Line extension to Admiralty, Kai Tak Development and development areas in the northern New Territories. The 14th Five-Year Plan and the Greater Bay Area The National 14th Five-Year Plan promulgates “expedition of the construction of inter‑city railways, co-ordinated planning for the positioning of ports and airports, and optimisation of the allocation of maritime and aviation resources” to strengthen connectivity in the Greater Bay Area, which calls for faster growth in infrastructure construction in the region. The Plan also raises support for Hong Kong to enhance its status as an international aviation hub, underscoring the importance of the on-going Three-runway System (3RS) Project at the Hong Kong International Airport. The pavement of the third runway was completed in September this year, and the entire 3RS Project is expected to complete by 2024. Belt and Road Opportunities In March 2015, China’s National Development and Reform Commission issued The Vision and Actions on Jointly Building the Silk Road Economic Belt and the 21st Century Maritime Silk Road, outlining the framework of the Belt and Road Initiative (BRI), co-operation priorities and mechanisms. As of 2020, it is estimated that mainland China has invested about US$770 billion into projects along the BRI routes, with over one-third of the investments went to transport infrastructure projects such as ports, railways, and roads, and real estate projects.[1] Hong Kong is renowned for its excellent professional services and it is expected that the industry can benefit from the ample opportunities ahead. A list of available investment projects along the Belt and Road can be found here. Developing Asia’s Infrastructure Needs Many developing Asian countries, such as India and Indonesia, have recognised the urgent need to upgrade their basic infrastructure, road networks, port facilities, housing and city planning to keep up with rapid economic growth. According to the Asia Development Bank (ADB), the region is estimated to require US$26 trillion from 2016 to 2030 to meet its infrastructure requirements, meaning US$1.7 trillion will be needed for each intervening year. Green Building Boom The growing awareness of the need for environmental protection is creating an increasing demand for green buildings. Hong Kong’s Urban Renewal Authority has announced its environmental sustainability policy for future urban renewal projects. According to the Hong Kong Green Building Council, more than 2,300 buildings are certified by BEAM Plus, a leading initiative in Hong Kong to offer independent assessments of building sustainability performance. One example is the Hong Kong’s Children Hospital, which has installed district cooling system, solar hot water system and photovoltaic panels on roof tops to reduce energy consumption. Hong Kong is outstanding in terms of integration and application of technologies and know how in designing and constructing green buildings. A prime example is Hong Kong’s K11 Atelier King’s Road, which is the first building in the world to achieve all platinum levels pre-certifications of the WELL Building Standard, Hong Kong BEAM Plus and the US’ LEED. The building has incorporated a number of green technologies such as use of low e-glazing, sensor-linked LED lighting system to enhance its sustainability features. It is also equipped with Asia’s largest solar photovoltaic thermal (PVT) installation on the rooftop to achieve higher energy savings and efficiency. Technology Adoption In order to strive under the competitive global environment, it is critical for the construction industry in Hong Kong to promote efficiency and innovation by adopting modern construction methods and techniques, information technology (IT) and automation technology. The use of IT technologies such as Building Information Modelling (BIM) has increased across the industry, including large-scale project owners such as MTR Corp and Airport Authority. The introduction of Construction Industry Council (CIC) BIM Standards allows industry participants to manage and assess BIM deliverables by architects, engineers, surveyors and contractors. To encourage innovative technologies in the construction sector, the Hong Kong government has set up a HK$1 billion Construction Innovation and Technology Fund (CITF) to help boost technology adoption and increase productivity via automation and digitisation. Categories of funding includes BIM, Modular Integrated Construction (MIC), prefabricated steel rebar, and other advanced technologies such as automated wall plastering machines. As of July 2021, over 1,900 CITF applications have been approved with total grant amount more than HK$487 million. Gammon Construction, a Hong Kong-based construction and engineering services provider, has been actively adopting technologies to boost productivity and safety in construction. Earlier this year, the company introduced G-eye – a mobile monitory system that provides real-time inspection of front-line conditions and site safety at any time, from any location. By coordinating with artificial intelligence (AI) behaviour detection, the system can also alert workers who enter restricted areas or who are not wearing the necessary protective equipment to enhance their safety awareness.The Closer Economic Partnership Arrangement between Hong Kong and the Mainland (CEPA)
CEPA provides many benefits to Hong Kong’s real estate and construction businesses, ranging from greater flexibility in entering the mainland market to mutual qualification recognition. The latest Agreement on Trade in Services consolidates and extends the liberalisation of services to the whole of China, which granted Hong Kong Services Suppliers (HKSS) national treatment to provide various construction and related engineering services across China. As of 31 August 2021, there were 106 approved HKSS in the construction professional services and construction and related engineering services sectors, and 29 approved HKSS in the real estate services sector. Further information on the latest CEPA agreements can be found here.Source: HKTDC Research by Melissa Ho
[1] Green Belt and Road Initiative Center