company and industry - building and construction industry
Why Hong Kong is a regional leader in construction The adoption of specialised construction techniques, such as reclamation and design-and-build methods, has made Hong Kong a regional leader.
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onstruction activities can broadly be classified into three categories, namely buildings (residential, commercial, and industrial/storage/service), structures and facilities (transport, other utilities and plant, environment, and sports and recreation), and nonsite activities (decoration, maintenance and repair, etc.). The overall gross value of construction work performed by main contractors in Hong Kong (in real terms) has been rising since 2009. A strong growth of 35% in the value of public sector sites drove up the construction activity by 16% to HK$129 billion in 2011. Recently the rise in public expenditure on infrastructure has mainly been driven by the Ten Mega Infrastructure Projects and transport infrastructural projects, including the Guangzhou-Shenzhen-Hong Kong Express Rail Link, and the Hong KongZhuhai-Macau Bridge. To expand land supply and enhance infrastructure, the government will carry out
works in new development districts such as Tseung Kwan O, Kai Tak, Tuen Mun and Yuen Long. These works include land formation, road construction and laying of water mains. As the infrastructure projects are being rolled out as scheduled, the demand for construction services in Hong Kong, particularly demand from the public sector, will remain high. Services Providers Hong Kong’s construction industry is characterised by a small number of large local contractors, a high level of subcontracting, presence of a large number of overseas contractors, with a substantial proportion of companies being both developers and contractors. Most of Hong Kong’s construction companies are small in size and those with less than HK$10 million (US$1.3 million) in annual gross value of construction work account for as high as 97% of the construction industry. The majority of the small ones act as
“The ten mega infrastructure projects announced in 2007 are being rolled out in phases as scheduled, boosting Hong Kong’s construction market.” subcontractors to the large companies, which tend to be main contractors. There are quite a number of very big construction companies capable of handling projects requiring sophisticated technology and strong financial background and are expanding their business across the region. Hong Kong contractors are experienced and highly skilled in building works. Because of the growing size and complexity of the projects, the current industry trend is to award large and complex building contracts as a single package to multi-disciplinary contractors. There is no formal restriction for entry to the contracting business in Hong Kong. Foreign and local contractors are treated alike, and they can tender public sector projects so long as they have good track records and sufficient financial capability. Many services professionals are involved in the building and construction industry, notably architects, surveyors and engineers. Exports Hong Kong’s expertise in timely construction of quality high-rise residential and commercial buildings is internationally renowned and in great demand in overseas markets, especially on the Chinese mainland. The Middle East has arisen to be a market with growing potential for Hong Kong’s construction companies. Government infrastructure plans as well as stimulus packages provide good support to construction activities in the Gulf region. Taking Saudi Arabia for example, the government launched a stimulus package valued over US$100 billion in 2011, with nearly half of the investment going to the infrastructure development. According to the country’s infrastructure report released in the first quarter of 2012, the construction industry is expected to grow at 5.4% in 2012. Major types of Hong Kong’s exported services include project management, contracting and engineering consulting. Industry Development and Market Outlook To achieve the objective of promoting economic growth through infrastructural development, the Hong Kong government has been increasing its infrastructure investment over the past few years. Some of the mega infrastructure projects announced
38 HONG KONG BUSINESS ANNUAL 2013