Industry Data
-
December 2007
Number of Construction Sites
946
Employment
50,103
No. of Establishments 2006
Employment 2006
Income* (HK$ bn) 2006
Building and Civil Engineering
19,057
135,337
138.3
Architectural, Surveying and Project Engineering
1,250
16,123
8.6
Real Estate Development, Leasing, Brokerage and Maintenance Management
4,886
93,963
57.2
HK$ million
2003
2004
2005
2006
Exports - Construction services
3,968
2,941
2,436
2,083
Major types of Hong Kong's exported services include project management, contracting and engineering consulting. Industry Development and Market Outlook New momentum in public infrastructure
The number of new constructions in Hong Kong has been in a downward trend since the late 1990's. For private residential units, the number of new units has dropped from 35,300 in 1998 to 10,471 in 2007. For the public sector, expenditure on public infrastructure remained steady. However, in the Chief Executive's Policy Address in October 2007, ten major infrastructure projects were announced, many of which have had their details published and tenders are expected to be released soon, driving up construction activities. Below is a summary of the ten infrastructure projects:
Project
Description
Value
(US$ mn)
Target commencement
Target completion
South Island Line
There are two parts to the South Island Line: the western section and the eastern section. The eastern section is first to be constructed. The 7-km underground rail line linking Admiralty to the Southern District on Hong Kong Island is expected to start in 2011. The Line will have 5 stops, located in major residential areas in the Southern District, as well as a famous tourist destination, the Ocean Park.
897
2011
2015
The Shatin to Central Link
The Link will have nine stops under the current plan, and will connect the northeast New Territories and Hong Kong Island via East Kowloon, together with an extension line (Kwun Tong Line Extension) with three stops, linking up Yau Ma Tei and Whampoa via Ho Man Tin.
The Link, with an estimated project value of US$4.8 billion, will be built in two phases. The first phase is the seven-stop Kowloon section, to be completed by 2015; and the second phase is the cross-harbour section, with the remaining two stops scheduled for completion in 2019. The Link is fully funded by the Hong Kong government, and MTR, the railway operator in Hong Kong, will take over its operation once completed.
The Kwun Tong Line Extension has an estimated project value of US$540 million, and is scheduled to be completed by 2015. The Extension is proposed to be funded by MTR, with the company taking over operation once the Extension is completed.
4,800 + 540
2010
The Tuen Mun Western Bypass and Tuen Mun Chek Lap Kok Link
The Bypass and the Link will link up Deep Bay in Shenzhen, the northwest New Territories and the Hong Kong International Airport. The environmental impact assessment (EIA) was completed in December 2007, investigation and preliminary design are to commence in May 2008.
Over 2,600
2016
The Guangzhou- Shenzhen-Hong Kong Express Rail Link
As a plan to link up the national rail network of the Chinese mainland, the Express Rail Link will connect West Kowloon to Shibi, Guangzhou. A dedicated line will be used to ensure its smooth operation. Once completed, Guangzhou will be within an hour distance from Hong Kong, and Beijing can be reached in 10 hours from Hong Kong.
4,487
2009
2014
Hong Kong- Zhuhai-Macau Bridge
The 29.6km-Bridge will link up Hong Kong, Zhuhai and Macau in a "Y" shape. In February 2008, the Hong Kong, Macau and Zhuhai governments reached a consensus on the project financing, which will be in the form of BOT (build-operate-transfer), with the three governments filling the funding gap if necessary. The tender for the Bridge is expected to be issued shortly.
Under the current plan, the six-lane bridge will have two reclaimed islands built, with a tunnel passing underground of the islands in order to ensure sea vessels to pass through smoothly in the Pearl River Delta ports.
Over 5,410
2008-2009
Hong Kong- Shenzhen Airport Cooperation
The Hong Kong and Shenzhen airports can achieve synergy by utilising their respective strengths in connectivity of international and Chinese mainland destinations. It is proposed that a dedicated rail link to be built between the two airports to further enhance collaboration. The feasibility study of the railway link is underway, with a scheduled completion in 2008.
n.a.
Hong Kong- Shenzhen Joint Development of the Lok Ma Chau Loop
The Lok Ma Chau Loop, an area near the Hong Kong-Shenzhen border, is being studied to develop it to the cities' mutual benefit. The coordination body, the Hong Kong-Shenzhen Joint Task Force on Boundary District Development, has been established recently for the purpose. The Task Force has already announced that a border-crossing to be established in Liantang, the northeastern part of Hong Kong.
West Kowloon Cultural District (WKCD)
WKCD, occupying about 40 hectares of land, is the flagship art and culture development in Hong Kong, which aims to provide a platform to enhance arts education and cultural exchange and cooperation. WKCD is to be administered by the West Kowloon Cultural District Authority, which is in the process of being set up, with the proposal forwarded to the Legislative Council for further action. The Hong Kong government has earmarked US$2.8 billion of upfront endowment for the project.
Over 2,769
Kai Tak Development Plan
The former airport of Hong Kong, with a size of about 76,000 sqm, is to become a cruise terminal with two berths, with an option to include hotels, dining places, as well as retail and commercial properties in the development. Tender for the project was issued in November 2007, and closed in March 2008.
2012
New Development Areas (NDAs)
NDAs are being planned to meet the demand for land and increasing population. Purposes of land use include housing, employment, high value-added and non-polluting industries. The size of NDAs is planned to be around one-fourth of new towns such as Shatin and Tuen Mun, and areas under study include Kwu Tung North, Fanling North, Ping Che, Ta Kwu Ling and Hung Shui Kiu.
Source: various press and government sources
In the financial budget 2008/09, the Hong Kong government plans to spend HK$21.8 billion on infrastructure projects for the fiscal year to 31 March 2009, with 27,000 new construction jobs expected to be created. Infrastructure projects in the region Many Asian countries (e.g. India and Vietnam) have urgent needs to continue upgrading their basic infrastructure, road networks, port facilities, housing and city planning, as most of them have recovered from the financial crisis and some are emerging as alternative production bases. Private participation is on the rise. Foreign firms are increasingly allowed to participate as investors in the ownership as well as the management of these projects. Middle East is another booming market. According to the Middle East Business Intelligence (MEED), the value of infrastructure projects planned or underway in the Gulf Cooperation Council countries (GCC - with Saudi Arabia, the United Arab Emirates, Kuwait, Bahrain, Qatar, and Oman as its members) amounted to over US$1,600 billion as of January 2008. Of that amount, the UAE led the league by having US$706 billion worth of projects, followed by Saudi Arabia (US$399 billion), Kuwait (US$275 billion), Qatar (US$157 billion), Oman (US$51 billion), and Bahrain (US$28 billion). Seeing the opportunities, Hong Kong construction companies are increasingly active in the Middle East construction market. For example, Wai Kee Holdings, a Hong Kong contractor, formed a strategic alliance with a UAE contractor, Arabian Construction Company, and have been jointly awarded some projects. A Hong Kong construction company, Paul Y, was awarded the contract worth US$77 million to build the Arraya Office Tower in Kuwait, a 54-storey office tower due for completion in July 2008. Another Hong Kong construction company, Chun Wo Development, which also has a property development arm, has purchased two pieces of land in Abu Dhabi (the capital city of the UAE) for residential development. China's construction market The size of China and its ascendance to be an important world production base has created enormous demand for infrastructure. Investment in construction and installation rose by 225% between 2000 and 2006, when it reached US$651 billion in 2006. Despite the rise in investment, there is still much room to grow in China's construction market, particularly the inner provinces which are relatively underdeveloped compared to coastal provinces. According to China's eleventh Five-Year-Plan, urbanisation is targeted to reach 47% in 2010 from 43% in 2005. This implies an almost 10% increase in urban areas as of 2005, which would certainly drive up demand for construction. In particular, the eleventh Five-Year-Plan highlighted some transportation infrastructure to be built, including: 14 expressways across the country, with one from Beijing to Hong Kong and Macau; six railways for passenger transportation, with one between Beijing and Shanghai, one between Beijing and Tianjin, as well as the upgrade of five existing railways from Datong and Qinhuangdao; port dredging projects at the Yangtze River Delta and Pearl River Delta; port transit systems across the country to facilitate raw materials and container transportation; as well as airports expansion in major cities like Beijing, Shanghai, and Guangzhou. For the real estate sector, despite the mainland government's repeated intervention to cool down the market, construction activities have remained robust. Hong Kong developers are particularly active in bidding for sites at major cities. For example, Hang Lung Properties pledged to invest US$5.1 billion in building commercial properties on the mainland by 2009; Swire Pacific has already invested over US$2.6 billion in hotels and commercial development; and Wharf Holdings has bid for 17 sites since mid-2005 with a total investment of US$3.8 billion. The proactive investment of Hong Kong developers should open up new opportunities for Hong Kong construction companies on the mainland. According to the Regulations on Administration of Foreign-Invested Construction Enterprises and Engineering Design Enterprises (the Regulations), which came into effect in December 2002, foreign construction enterprises are allowed to establish wholly foreign-owned construction enterprises. Sino-foreign construction joint ventures can undertake all kinds of projects within the permitted scope of their grades of qualifications. 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 and their qualifications are managed by a grading and categorisation system. Under CEPA, the performance and experience of Hong Kong construction enterprises obtained outside the Chinese mainland will be considered in assessing their qualifications to establish operations on the mainland. This provision would facilitate Hong Kong construction enterprises to apply for a higher qualification grading and enhance their opportunities for market presence. According to Chapter 3 of the Regulations on Administration of Foreign-Invested Construction Enterprises, the business scope of wholly foreign-owned construction enterprises on mainland construction projects is restricted. But CEPA allows Hong Kong companies to have more room to participate in foreign-invested projects. CEPA also explicitly states that Hong Kong-invested construction enterprises on the mainland that have acquired quality construction certification are permitted to bid for projects in all parts of the mainland. Moreover, Hong Kong companies are permitted to wholly acquire construction enterprises there. According to Chapter 4 of the Implementing Measures of the Ministry of Construction Concerning Qualification Management under the Regulations on Administration of Foreign-Invested Construction Enterprises, the number of foreign service providers serving as project managers in a foreign-invested construction enterprise must not exceed one-third of the total number of project managers. Thanks to CEPA provisions, this restriction is now relaxed for Hong Kong services providers. Chapter 4 of the above measures also states that the foreign service providers employed by a foreign-invested construction enterprise must reside on the mainland for a cumulative period of at least three months a year. Under CEPA, the residency requirement is waived for Hong Kong permanent residents employed as engineering technical staff and financial managerial staff. Registered capital requirements for domestic and joint-venture construction enterprises remain slightly different. Regarding mutual recognition of professional qualification, the mainland and Hong Kong government departments and professional bodies have come to agreements on several construction-related disciplines since November 2003, including: estate surveying, architecture, structural engineering, planning, quantity surveying and building surveying. The CEPA measures announced in late June of 2006 stipulate that Hong Kong companies can set up wholly-owned construction engineering cost consulting service companies on the mainland. Hong Kong companies’ individual performance, be it in Hong Kong or on the mainland, will be taken into account in qualification assessment by mainland authorities (as in the case of engineering design enterprises and urban planning service enterprises). As at 31 March 2008, there were 65 approved Hong Kong services providers in the sector of construction professional services and construction and related engineering services, out of a total of 68 applications.
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