Coronavirus: Hong Kong construction costs slip as Covid-19 pandemic stifles activity, putting some pressure on house prices

Hong Kong dropped from third to eighth in a global construction costs index as building activity took a knock, potentially subduing new-home prices

Building costs dropped by 3 to 4 per cent in the first quarter to an average of HK$4,200 to HK$5,000 per square foot, Arcadis says in report

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Hong Kong’s construction costs have dipped amid a drop in building activity during the pandemic. Photo: Sam Tsang

Published: 8:30am, 9 Jun 2021Updated: 9:56am, 9 Jun 2021

Hong Kong’s construction costs have dipped amid a drop in building activity during the pandemic, theoretically putting pressure on the prices of new homes, according to Arcadis, an Amsterdam-headquartered design and consultancy firm.

Hong Kong dropped from third to eighth position in Arcadis’ 2021 International Construction Cost Index. It was the highest ranked Asian city, a couple of spots above Macau in 10th but a long way behind Geneva, Switzerland, which topped the table of 100 cities.

Hong Kong was second globally in the index in 2017 and took third place from 2018 to 2020.

“The reduction of construction costs in Hong Kong reflects the improvement of efficiency in the construction industry by the adoption of innovative ways of working, and the reduction in [the] volume of works in the market,” said Francis Au, growth director for Greater China at Arcadis.

Costs dropped by 3 per cent to 4 per cent year on year in the first quarter of 2021, according to the index, to an average of HK$4,200 to HK$5,000 per square foot. They are likely to remain stable in 2021, Au said, supported by rising material costs.

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