Fast economic growth in 2017 saw GDP expand 3.7 percent, driven by a solid stock market, a hot real estate sector, employment growth and a strengthening global economy. 2018 looks brighter, with 3.5 percent GDP growth forecast.
Unemployment and inflation rates remain steady, but an interest rates rise may dampen domestic consumption. However, robust growth in both China and the US should benefit Hong Kong.
The new Hong Kong Special Administration Region (KHSAR) chief executive Carrie Lam in 2017 emphasised boosting housing and infrastructure. A new home-ownership scheme to provide 1,000 affordable flats for middle-class households has shifted the orientation of government public housing policy from rental to ownership. With tourism recovering, construction has begun on a USD18bn airport expansion project to provide a new terminal and third runway by 2024.
USD25.6bn has been committed to a ten-year plan to build a new acute hospital at Kai Tak Development area, expand 11 hospitals, construct three new community health-care centres and a support-services centre. Commercial construction remained buoyant and is forecast to grow in 2018, even though banking-related demand has declined.
|Cost escalation 2017–18:||2.0%|
|Cost escalation 2018–19:||4.0%|
|Location factor (USD):||93.1|
Despite being high historically, construction cost inflation is expected to persist in 2018 and beyond. Labour is increasingly stretched, exacerbated by an ageing population. This is increasing construction costs as employers raise wage rates to retain their workforce in a tight labour market.
This content is part of the International construction market survey 2018