Hong Kong is the costliest Asian city to build anything, survey says

Jane Li
This photo taken on February 9, 2017 shows labourers working on a construction site of the Hong Kong Boundary Crossing Facilities (HBBCF) of the Hong Kong-Zhuhai-Macau Bridge, in Hong Kong.
Anthony Wallace | AFP | Getty Images

Hong Kong, already the world's least affordable urban centre to live and work in, is also the costliest Asian city to get anything built, due to its severe shortage of construction labour, according to a survey by global design and architecture consultancy Arcadis.

Hong Kong's registered construction workers numbered 427,609 as of January, according to the city's Construction Industry Council website. Their productivity and number of working days are declining, as 40 per cent of registered workers are older than 50 years, according to data by Hong Kong's Construction Industry Alliance.

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"The major reason is shortage of labour in Hong Kong," a persistent problem with no apparent and immediate solutions, said Francis Au, Arcadis' country head for Hong Kong and Macau, in releasing the International Construction Costs Index. "Solutions based on migrant labour aren't acceptable to the local population at this stage. To stabilise the rising building costs, the government and the construction industry will have to look into investing in initiatives and solutions that can increase industrial productivity."

Macau is Asia's second-most expensive city for building because of the massive number of casinos under construction, he said.

"We used to call those casinos money-printing machines,'" Au said. Unlike Hong Kong, Macau can import construction workers from mainland China and Hong Kong, which goes some way to alleviating the labour shortage and cap the costs.

MNCs are decamping from Hong Kong's CBD

For the remainder of this year, Hong Kong's construction industry workload can be sustained by upcoming mega projects such as the Hong Kong-Zhuhai-Macau bridge, and large housing programmes with 480,000 apartment units expected to be built over the next decade, Arcadis said.

Slower economic growth in China may cut construction costs by 2 to 3 percentage points, he said.

"As China's state economic policy is to expand overseas, we can expect to see more Chinese funds go to other Asian countries such as the Philippines, Malaysia and Cambodia to fuel their infrastructure projects building," he said.

North of the border, mainland China will be home to three of the world's 10 priciest infrastructure projects of 2017, with President Xi Jinping's US$150 billion "One Belt, One Road" signature programme topping the Arcadis survey.

India's US$90 billion New Delhi-Mumbai Industrial Corridor is the world's second-most expensive public works project, Arcadis said. A US$13 billion airport extension in Beijing and a US$11 billion airfield in Chengdu round off the ninth and 10th positions on the Arcadis survey.

"Four out of the 10 highest-value construction projects in 2017 are in Asia," said Alan Hearn, Arcadis' head of Asia buildings solutions. "Among them are the "One Belt One Road" initiative and the New Delhi-Mumbai Industrial Corridor. Mega projects like these are mainly funded by public-private partnerships that will continue to fuel the development of the construction industry in Asia."

'One Belt, One Road' makes slow progress

With the Chinese economy expanding at the slowest pace in almost three decades, the government is relying on infrastructure spending to pump prime demand, generate jobs and spur spending in the world's second-largest economy.

India too is turning on the taps for public works, finally putting resources behind the push to enhance and improve the country's creaky telecommunications, transportation and logistics infrastructure to facilitate economic growth.

China has already spent more on public works than North America and western Europe combined in the two decades between 1992 and 2013, according to McKinsey Global Institute's 2016 survey. The Chinese government will pump 1.8 trillion yuan (US$261 billion) into roads and waterways, 800 billion yuan into new railway tracks and upgrades, and begin the construction of 15 major hydroelectric dams and power stations, according to the latest government work report delivered on Sunday at the National People's Congress in Beijing.

New York's US$20 billion Hudson Yards project is the sixth most expensive, and the Crossrail in London ranks eighth.

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