Construction in Hong Kong – Key Trends and Opportunities to 2019

Date: 2016-02

“• In December 2014, the Hong Kong housing authority launched its Long-Term Housing Strategy, through which it aims to increase public rental housing (PRH) units, provide subsidized flats, expand home ownership programs, and stabilize the residential property market through the steady supply of land. Using a PPP model, the government aims to construct 480,000 housing units in Hong Kong during 2015–2025. Accordingly, the public sector is expected to construct 60.0% of the total housing target by 2025, which includes the construction of 290,000 housing units with a mixture of 200,000 PRH units and 90,000 subsidized sale flats. The private sector is expected to construct the remaining 190,000 units by 2025.

• Hong Kong has one of the world’s least affordable housing markets, with house prices rising continuously during the review period. According to the Rating and Valuation Department, house prices rose by 21.3% in April 2014 as compared to April 2013. The house price index also increased by 274.2% from April 2004 to April 2015. Concerns over affordability have increased, leading to the introduction of new laws and policies. The increase in house prices can also be attributed to the increased flow of money from the central banks of developed countries following the global financial crisis. To control the forming of a real estate ‘bubble’, the government in the year 2012 introduced several price-control measures such as a 15.0% extra tax for non-resident buyers, and higher minimum down-payments.

• With insufficient supply of freshwater, Hong Kong depends on China for its water-supply needs. To reduce its reliance on China, the government is focusing on developing alternative water resources. In 2008, the Water Supplies Department implemented its Total Water Management Strategy, which includes developing options for water resources. The government also plans to build a seawater desalination plant with an initial capacity of 50.0 million m3 per annum, which may be extended to 90 million m3 per annum. The tender and funds for this project will be secured between 2015¬ and 2017, with the aim of commencing operations in 2020.

• According to the Hong Kong budget 2015–2016, international visitors rose by 12.0% in 2014 compared to 2013. The total number of visitors reached60.0 million in 2014, and total tourism spending also rose by 9.0% compared to 2013, reaching a value of HKD2.7 trillion (US$350.0 billion) in 2014.The government aims to promote multi–destination tourism for international visitors in alliance with the Guangdong and Macau authorities. It also plans to involve neighboring ports into the Asia Cruise Fund.

• To meet demand for international schools from overseas families living in Hong Kong, the Education Bureau is planning to increase school areas by allocating vacant school premises and sites for international school development. In 2014, the bureau identified another two vacant school premises and three green-field sites for international school development. The government’s commitment to developing the education sector will support construction activity in the education buildings category. With an investment of HKD5.1 billion (US$653.0 million) Ying Wa Girl’s School is planning to redevelop. The project is expected to be completed by 2018 with the Architectural Services Department and the GHKSAR jointly undertaking construction.”

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