Hong Kong market intelligence: strategising for growth and economic resilience 

Cautious economic outlook: projected growth and sector challenges 

In 2024, Hong Kong’s construction sector is projected to grow with an expected increase in GDP of 2.5 percent to 3.5 percent. This follows a 3.2 percent growth in 2023, after a decline in 2022 due to the impact of COVID-19. The positive outlook is further driven by planned major infrastructure projects, increased housing and land supply, and investments in technology. However, the sector continues to face challenges, such as a weakened demand from Mainland China, rising labour costs, skilled labour shortages and high construction costs. 

Impact of the Hong Kong Budget 2024-2025 

The 2024-2025 Hong Kong Budget emphasises the government’s commitment to high-quality development and economic growth. Significant investments are earmarked for infrastructure projects, housing, technology, healthcare, tourism and smart transit systems. Key initiatives include the Northern Metropolis and an enhanced housing supply, which aim to reinforce Hong Kong’s position as a leading business hub. Land and housing supply is set to increase, with a target of 308,000 public housing units to be delivered by 2033-2034.   

Tender price escalation forecast: a moderate increase 

Tender prices are expected to rise moderately by 2.0 percent in 2024, reflecting a tempered increase compared to previous years. Tender price escalations gradually slowed in the last year due to economic headwinds, high interest rates, lower-than-forecasted land sales and the Hong Kong dollar’s fixed exchange rate with the US dollar.  

Material costs for construction are also fluctuating, with a stronger Hong Kong dollar and reduced demand for materials from Mainland China likely lowering material costs this year. Despite economic headwinds, Hong Kong’s tender price escalation rate has shown a positive trend ranging from 3.0 to 5.0 percent over the past three years. 

Embracing alternative project delivery models 

With the focus on large-scale developments, such as the Northern Metropolis, and expanded transport infrastructure, stakeholders are encouraged to leverage public-private partnerships (PPP), delivery partner approach, framework contracting, and digital programme management offices to enhance efficiency, cost management and project governance. 

These alternative procurement and project delivery models are widely adopted globally and allow for better preparation and management of complex supply chains. Effective programme leadership and strategic cost management are crucial to leveraging economies of scale and securing savings in procurement. Financial prudence and robust project governance are essential as the industry moves towards a steady, yet cautious growth outlook amid macroeconomic challenges.