Construction activity in Hong Kong is on the rise, pushing up building costs, a survey shows. And though costs are also rising on the mainland, it remains a much cheaper place to build than the city.
In the latest poll of surveyors in Asia, the majority of those working in Hong Kong report that building work has increased in the city this year. Most said last year that building activity was then in a decline.
The survey by the Building Costs Information Service (BCIS) also reveals that construction investment in Hong Kong is up 5 per cent so far this year.
Responses to the survey reveal mixed fortunes in the construction sector, with building of hotels, retail space, offices, and private housing growing rapidly, while industrial projects dwindle. Public sector and infrastructure schemes remain relatively scarce.
But the overall increase in construction activity means wages and raw materials costs are rising, the BCIS Asia Construction Survey 2007 shows. Seventy-nine per cent of survey respondents say input costs have gone up this year. This increase in costs has only partly led to contractors charging developers higher fees, with slightly less than half of the respondents saying this had happened.
Developers may have to dig deeper into their pockets next year. Of those polled, 75 per cent expect input costs to continue rising over the next six months and slightly more than half said contractors would charge developers higher fees as a result.
'The figures are much higher on input costs than output prices, which is money paid to contractors. Therefore, more inflation is coming along,' said Joe Martin, executive director of the BCIS.