Hong Kong market intelligence: 2023 set to be a pivotal year

By Daniel Cheung, Strategic Lead, Hong Kong & Macau, and Head of Infrastructure, Northeast Asia (NEA) and Cheryl Lum, Director, Head of Data and Research.  

Our report provides a snapshot of the current landscape for Hong Kong’s construction industry, including details about construction output, tender price escalation forecast for 2023 and materials costs, as well as the industry’s key challenges and position within the wider economy.  

Strong economic outlook 

We expect 2023 to be a year of robust recovery for Hong Kong’s construction industry with strong levels of construction output, a solid pipeline of new public- and private-sector projects, and substantial government investment in infrastructure, housing and land development projects in the next few years. 

Budget 2023-24 

The government has taken the opportunity to make some major investments in housing and infrastructure. The city’s leaders are keen to address the long-running housing shortage and to invest in new approaches to construction. This includes taking steps to involve the industry in digital innovation where possible and to ensure that building projects line up with a wider environmental agenda. 

Tender price escalation forecast 

Despite ongoing challenges, Hong Kong’s tender prices have continued to rise at a slow and steady rate of approximately three to five percent per annum over the past two to three years. Assuming market conditions remain largely stable, the report forecasts that tender prices will rise by four percent in 2023. 

Collaborative and cost-based contracting going mainstream 

Hong Kong continues to see a growing adoption of collaborative and cost-based contracting. NEC Professional Service Contracts (PSC), Engineering and Construction Contracts (ECC), and the NEC4 suite of contracts are being used more and more commonly in Hong Kong. The number of projects adopting NEC contracts has increased from circa 100 in 2018 to over 440 projects in 2022. 

The industry is well-placed to further increase productivity and efficiency by encouraging its wider adoption for major projects. The current landscape of global risks makes this rationalised approach essential for the ongoing well-being of the entire industry. 

Daniel Cheung, Strategic Lead, Hong Kong & Macau, and Head of Infrastructure, NEA, said, 

Hong Kong’s construction industry is set to play a central role in advancing our city’s renewed development.

"We have already embarked on a year of great construction activity and are looking forward to supporting the government, developers and corporations in delivering major projects on time and on budget."

Download our latest market intelligence report to see more economic data and insight in Hong Kong.