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Building and Construction Industry in Hong Kong


  • Hong Kong companies have earned a reputation over the years in 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.
  • Hong Kong's construction industry performed well in the second quarter of 2012, with the gross value of construction work performed by main contractors amounting to HK$39.2 billion (US$5.0 billion), gaining 34% year-on-year (YoY).
  • Most of the export markets for Hong Kong’s building and construction services are in Asia, with the Chinese mainland being a major one. Asia and the Middle East are also promising markets. Major services categories include project management, contracting and engineering consulting.
  • The ten mega infrastructure projects announced in 2007 are being rolled out in phases as scheduled, boosting Hong Kong’s construction market.
  • China’s 12th Five-Year-Plan, released in March 2011, shows the country’s intention of further increasing investment on the infrastructure development, offering great opportunity for Hong Kong contractors.

Industry Data



(YoY %)


(YoY %)

Number of Construction Sites






























Source: Quarterly Report of Employment and Vacancies at Construction Sites, Census and Statistics Department

Major indicators of the building and civil engineering industries




YoY %









Gross value of construction works performed
(HK$ million)




Source: Key Statistics on Business Performance and Operating Characteristics of the Building, Construction and Real Estate sectors in 2010

Range of Services

Construction activities can broadly be classified into three categories, namely buildings (residential, commercial, and industrial/storage/service), structures and facilities (transport, other utilities and plant, environment, and sports and recreation), and non-site activities (decoration, maintenance and repair, etc.).

The overall gross value of construction work performed by main contractors in Hong Kong (in real terms) has been rising since 2009. A strong growth of 35% in the value of public sector sites drove up the construction activity by 16% to HK$129 billion in 2011.

Recently the rise in public expenditure on infrastructure has mainly been driven by the Ten Mega Infrastructure Projects and transport infrastructural projects, including the Guangzhou-Shenzhen-Hong Kong Express Rail Link, and the Hong Kong-Zhuhai-Macau Bridge.

To expand land supply and enhance infrastructure, the government will carry out works in new development districts such as Tseung Kwan O, Kai Tak, Tuen Mun and Yuen Long. These works include land formation, road construction and laying of water mains. As the infrastructure projects are being rolled out as scheduled, the demand for construction services in Hong Kong, particularly demand from the public sector, will remain high.

Gross value of construction works performed by main contractors



2012 Jan-Mar

2012 Apr-Jun

HK$ million

YoY %

HK$ million

YoY %

HK$ million

YoY %

Private sector sites







Public sector sites 







Locations other than sites







All group







Source: Report on the Quarterly Survey of Construction Output, Hong Kong Census and Statistics Department

Services Providers

Hong Kong's construction industry is characterised by a small number of large local contractors, a high level of subcontracting, presence of a large number of overseas contractors, with a substantial proportion of companies being both developers and contractors.

Most of Hong Kong's construction companies are small in size and those with less than HK$10 million (US$1.3 million) in annual gross value of construction work account for as high as 97% of the construction industry. The majority of the small ones act as subcontractors to the large companies, which tend to be main contractors. There are quite a number of very big construction companies capable of handling projects requiring sophisticated technology and strong financial background and are expanding their business across the region.

Hong Kong contractors are experienced and highly skilled in building works. Because of the growing size and complexity of the projects, the current industry trend is to award large and complex building contracts as a single package to multi-disciplinary contractors.

There is no formal restriction for entry to the contracting business in Hong Kong. Foreign and local contractors are treated alike, and they can tender public sector projects so long as they have good track records and sufficient financial capability.

Many services professionals are involved in the building and construction industry, notably architects, surveyors and engineers.


Hong Kong's expertise in timely construction of quality high-rise residential and commercial buildings is internationally renowned and in great demand in overseas markets, especially on the Chinese mainland. The Middle East has arisen to be a market with growing potential for Hong Kong’s construction companies. Government infrastructure plans as well as stimulus packages provide good support to construction activities in the Gulf region. Taking Saudi Arabia for example, the government launched a stimulus package valued over US$100 billion in 2011, with nearly half of the investment going to the infrastructure development. According to the country’s infrastructure report released in the first quarter of 2012, the construction industry is expected to grow at 5.4% in 2012.

Major types of Hong Kong's exported services include project management, contracting and engineering consulting.

Hong Kong Exports of Construction Services






Value (US$ million)





Share of total service exports (%)





YoY growth (%)





Source: Report on Hong Kong Trade in Services Statistics, Census and Statistics Department

Industry Development and Market Outlook

New momentum in 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. Some of the mega infrastructure projects announced in the Policy Address in October 2007 have had their details published and tenders released, thereby driving up local construction activities. Below is a summary of the ten infrastructure projects:

Table: Ten infrastructure projects

Apart from the ten infrastructure projects, the Hong Kong government has also forged ahead with other works, such as Operation Building Bright and Revitalising Historic Building. In addition, further development of the Hong Kong International Airport, including the construction of the third runway, has been approved.

In the Budget 2012/13, the Hong Kong government projected that total public spending on infrastructure will go up by 7.4% to HK$62 billion (US$7.9 billion) for the fiscal year ending 31 March 2013. As a result, the total value of infrastructural projects is expected to rise significantly from HK$62 billion in 2007/08 to HK$184 billion in 2012/13. In the next few years, the public infrastructure expenditure is estimated to exceed HK$70 billion annually.

Infrastructure projects in the region

Many Asian countries need to upgrade their basic infrastructure such as road networks, port facilities, and housing. The rise of Asian consumerism has also led to rising investment in modernising their retail distribution channels. Shopping malls are springing up in many Asian countries, typically India, Indonesia, the Philippines, Thailand, Malaysia and Vietnam. Hong Kong construction companies are actively seeking opportunities in these markets. Luks Group, for example, engages in cement production and property development in Vietnam.

The Middle East is another market which has attracted many Hong Kong companies, with many projects won in many Middle East countries. Hip Hing Construction has won contracts in Abu Dhabi’s (the capital city of the UAE) carbon-free city Masdar, as well as contracts in Dubai to construct a 72-storey residential building called HHHR Tower together with Al Ahmadiah Contracting & Trading. Paul Y was awarded a contract worth US$77 million to build the 54-storey Arraya Office Tower in Kuwait. Another Hong Kong construction company, Chun Wo Development, also entered the Middle East market with initial investments in two residential projects in Abu Dhabi (expected to be completed by 2013).

China's construction market

Rapid urbanisation has driven up China’s infrastructure development. According to China’s 12th Five-Year-Plan, urbanisation is targeted to go up by 4%, reaching 51% in 2015 from 47% in 2010. With the help of the RMB4 trillion stimulus package introduced in the wake of the international financial crisis in late 2008, infrastructure development on the Chinese mainland gained growth momentum. According to the United Nations, China’s urbanisation rate is projected to reach 53.2% in 2020, and 72.9% in 2050. Infrastructure demand is likely to remain robust in the foreseeable future.




Change (%)

Urbanisation rate (%)




Population density in cities (persons / sq.km)




Area of built districts (sq.km)




Length of paved roads at year-end ('000 km)




Coverage of urban population with access to tap water (%)




Length of gas pipelines ('000 km)




Length of city sewage pipes ('000 km)




Volume of garbage disposal (million tonnes)




Source: China Statistical Yearbook

China devoted around 9% of its GDP to public building and improvement projects during 2005-2010, compared with the respective ratios of 2.4% and 5% in the US and Europe, according to a report released by the US Treasury Department and the Council of Economic Advisors. More importantly, China will continue the trend of increasing spending on infrastructure as per the country’s 12th Five-Year-Plan.

Table: Some construction plans under the 12th Five-Year-Plan (FYP)

The Closer Economic Partnership Arrangement between Hong Kong and the Mainland (CEPA)

Under CEPA, construction professional services include construction design services, engineering services, integrated engineering services, urban planning and landscape design services (except overall urban planning services).

According to the Regulations on Administration of Foreign-Invested Construction Enterprises promulgated in end-2002, the application for and approval of the establishment of foreign-invested construction enterprises has been further relaxed. However, CEPA still enjoys a number of preferential treatments compared with China’s WTO commitments.

In applying as a wholly-owned construction and engineering design enterprise, foreign service providers who have been qualified as certified architects or certified engineers in China shall not be fewer than 1/4 of the total certified professionals required under the qualification grading criteria (1/8 for a joint-venture (JV) construction and engineering design enterprise), and the foreign service providers who have the relevant design experience shall not be fewer than 1/4 of the total key technical personnel required under the qualification grading criteria (1/8 for a joint-venture construction and engineering design enterprise). Under CEPA, Hong Kong Service Suppliers (HKSS) can employ mainland registered professionals to fulfil the requirements.

In addition, for a foreign enterprise applying for a JV enterprise, the proportion of total capital contributed by mainland partners of JVs should be no less than 1/4 of the registered capital, whereas mainland partners of HKSS are not subject to the required proportion of the registered capital.

Under Supplement VII to CEPA, Hong Kong professionals who have obtained Mainland's Class-1 registered architect qualification or Class-1 registered structural engineer qualification, can act as partners to set up construction and engineering design offices on the Mainland in accordance with the relevant qualification requirements, without restrictions on the ratio of the number of Hong Kong partners to the number of the Mainland partners, the ratio of the total capital contributed by the Hong Kong partners to that by the Mainland partners, or the Hong Kong partners' period of residence on the Mainland. Hong Kong professionals who have obtained Mainland's Class-1 registered architect qualification or Class-1 registered structural engineer qualification by mutual recognition, can register and practise in Guangdong.

Supplement VIII to CEPA provides Hong Kong professionals with national treatment in Guangdong, they are allowed to register and practise in Guangdong on the same basis as their mainland counterparts with the same professional qualifications from April 2012. In addition, they are recognised as registered practitioners for the purpose of declaration of engineering design enterprise qualifications within Guangdong.

Under Supplement IX to CEPA, which will take effect from January 2013, Hong Kong professionals with the Mainland's supervision engineer qualification, registered architect, registered structural engineer, registered civil engineer (harbour and waterway), registered public facility engineer, registered chemical engineer or registered electrical engineer qualification, are allowed to register and practise in Guangdong regardless of whether they are registered practitioners in Hong Kong. They are recognised as registered practitioners for the purpose of declaration of supervision enterprise or engineering design enterprise qualifications within Guangdong, in accordance with the relevant Mainland regulations.

As at 31 July 2012, there were 76 approved HKSS in the sector of construction professional services, and construction and related engineering services, out of a total of 80 applications.

Content provided by Picture: Jacqueline Yuen
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